Everyone is familiar with the word "auction", but the process and details involved are generally unknown to many. Be sure to read this post for daily auction attendees and people who are still new to the industry, the latest news, updates and even training!
What is Auction?
The word "auction" is derived from the Latin word auctum, supine of augeō, "I increase". For much of history, auctions have been a relatively rare way of negotiating the exchange of goods and antiques. In practice, selling is significantly more common than both bargaining and fixed price. Auction is usually the process of buying and selling the goods or services to the buyer by bidding, then selling the product to the highest bidder or buying and selling the product from the lowest bidder.
There are some exceptions to this definition and it is explained in the section on different species. The branch of economic theory that deals with the types of auctions and participants' behavior in auctions is called auction theory. The auction price increasement is probably the most common form of auction used throughout history.
Participants bid against each other and each subsequent bid must be higher than the previous one. An auctioneer may announce prices, bidders can submit their bids themselves, or request an offer from a proxy on their behalf, or bids may be submitted electronically, with the highest current bid publicly displayed.
Auctions are held and practiced for trade in a variety of contexts. These contexts are antiques, paintings, rare collections, expensive wines, commodities, livestock, radio spectrum, used cars, even the emission trade, and much more.
The rise of the internet
The development of the Internet has led to a significant increase in the use of auctions and introduced the concept of online auctions, as auctioneers can request bids from a wide range of buyers on the Internet on a much wider range of products than was previously practical.
In the 1990s, Multi-Qualification auction was invented to negotiate the terms of comprehensive construction and electricity contracts through auctions.
Platforms such as Eker Gallery provide millions of potential antiques to buyers. In addition to established auction houses, specialist online auctions sell rare items from antiques and collectibles, to books, old photo archives and many more.
Auction theory is a branch of applied economics that deals with how bidders behave in auction markets and explores how the characteristics of auction markets promote predictable results. Auction theory is a tool used to inform the design of real-world auctions.
Sellers use auction theory to generate higher revenue while allowing buyers to buy at lower cost. Price conference between buyer and seller is an economic balance.
Auction theorists design rules for auctions to address issues that could lead to market failure. The design of these rule sets encourages optimal bidding strategies across various notification settings. The 2020 Sveriges Riksbank Prize for Economic Sciences, in memory of Alfred Nobel (popularly known as the Nobel Prize in Economics), was given to Paul R. Milgrom and Robert B. Wilson for "improvements in auction theory and inventions of new auction formats".