An auction is a process of buying and sellinggoods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder. The open ascending price auction is arguably the most common form of auction in use today. Participants bid openly against one another, with each subsequent bid required to be higher than the previous bid. An auctioneer may announce prices, bidders may call out their bids themselves (or have a proxy call out a bid on their behalf), or bids may be submitted electronically with the highest current bid publicly displayed. In a Dutch auction, the auctioneer begins with a high asking price for some quantity of like items; the price is lowered until a participant is willing to accept the auctioneer's price for some quantity of the goods in the lot or until the seller's reserve price is met. While auctions are most associated in the public imagination with the sale of antiques, paintings, rare collectibles and expensive wines, auctions are also used for commodities, livestock, radio spectrum and used cars. In economic theory, an auction may refer to any mechanism or set of trading rules for exchange.
An auctioneer and her assistants scan the crowd for bidders
An American auctioneer at a livestock auction, November 2010
The word "auction" is derived from the Latin augeō, which means "I increase" or "I augment". For most of history, auctions have been a relatively uncommon way to negotiate the exchange of goods and commodities. In practice, both haggling and sale by set-price have been significantly more common. Indeed, before the seventeenth century the few auctions that were held were sporadic.
Nonetheless, auctions have a long history, having been recorded as early as 500 B.C. According to Herodotus, in Babylon auctions of women for marriage were held annually. The auctions began with the woman the auctioneer considered to be the most beautiful and progressed to the least. It was considered illegal to allow a daughter to be sold outside of the auction method.
During the Roman Empire, following military victory, Roman soldiers would often drive a spear into the ground around which the spoils of war were left, to be auctioned off. Later slaves, often captured as the "spoils of war", were auctioned in the forum under the sign of the spear, with the proceeds of sale going towards the war effort.
The Romans also used auctions to liquidate the assets of debtors whose property had been confiscated. For example, Marcus Aurelius sold household furniture to pay off debts, the sales lasting for months. One of the most significant historical auctions occurred in the year 193 A.D. when the entire Roman Empire was put on the auction block by the Praetorian Guard. On 28 March 193, the Praetorian Guard first killed emperor Pertinax, then offered the empire to the highest bidder. Didius Julianus outbid everyone else for the price of 6,250 drachmas per guard, an act that initiated a brief civil war. Didius was then beheaded two months later when Septimius Severus conquered Rome.
From the end of the Roman Empire to the eighteenth century auctions lost favor in Europe, while they had never been widespread in Asia.
In some parts of England during the seventeenth and eighteenth centuries auction by candle began to be used for the sale of goods and leaseholds. In a candle auction, the end of the auction was signaled by the expiration of a candle flame, which was intended to ensure that no one could know exactly when the auction would end and make a last-second bid. Sometimes, other unpredictable processes, such as a footrace, were used in place of the expiration of a candle. This type of auction was first mentioned in 1641 in the records of the House of Lords. The practice rapidly became popular, and in 1660 Samuel Pepys's diary recorded two occasions when the Admiralty sold surplus ships "by an inch of candle". Pepys also relates a hint from a highly successful bidder, who had observed that, just before expiring, a candle-wick always flares up slightly: on seeing this, he would shout his final - and winning - bid. The London Gazette began reporting on the auctioning of artwork at the coffeehouses and taverns of London in the late 17th century.
The Microcosm of London (1808), an engraving of Christie's auction room
The first known auction house in the world was Stockholm Auction House, Sweden (Stockholms Auktionsverk), founded by Baron Claes Rålamb in 1674.Sotheby's, currently the world's second-largest auction house, was founded in London on 11 March 1744, when Samuel Baker presided over the disposal of "several hundred scarce and valuable" books from the library of an acquaintance. Christie's, now the world's largest auction house, was founded by James Christie in 1766 in London and published its first auction catalog in that year, although newspaper advertisements of Christie's sales dating from 1759 have been found.
By the end of the 18th century, auctions of art works were commonly held in taverns and coffeehouses. These auctions were held daily, and auction catalogs were printed to announce available items. In some cases these catalogs were elaborate works of art themselves, containing considerable detail about the items being auctioned. At this time, Christie's established a reputation as a leading auction house, taking advantage of London's status as the major centre of the international art trade after the French Revolution.
During the American Civil War, goods seized by armies were sold at auction by the Colonel of the division. Thus, some of today's auctioneers in the U.S. carry the unofficial title of "colonel".
The development of the internet, however, has led to a significant rise in the use of auctions as auctioneers can solicit bids via the internet from a wide range of buyers in a much wider range of commodities than was previously practical.
In 2008, the National Auctioneers Association reported that the gross revenue of the auction industry for that year was approximately $268.4 billion, with the fastest growing sectors being agricultural, machinery, and equipment auctions and residential real estate auctions.
Real Estate Auctions
An estate agent, John Morrisby, conducting an auction of real estate in Melbourne, Victoria, Australia.
In some countries, such as Australia, auction is a common method for the sale of real estate. Used as an alternative to the private sale/treaty method, where a price is disclosed and offers can be made to purchase the property that price, auctions were traditionally used to sell property that, due to its unique characteristics, was difficult to determine a price for. The law does not require a vendor to disclose their reserve price prior to the auction. During the 1990's and 2000's, auction became the primary method for the sale of real estate in the two largest cities, Melbourne and Sydney. This was largely due to the fact that in a private sale the vendor has disclosed the price that they want, and potential purchasers would attempt to low-ball the price, whereas in an auction purchasers do not know what the vendor wants, and thus need to keep lifting the price until the reserve price is reached.
The method has been the subject of increased controversy during the twenty-first century as house prices sky-rocketed. The rapidly rising housing market saw many homes, especially in Victoria and New South Wales, selling for significantly more than both the vendors' reserve price and the advertised price range. Subsequently, the auction systems' lack of transparency about the value of the property was brought into question, with estate agents and their vendor clients being accused of "under-quoting". Significant attention was given to the matter by the Australian media, with the government in Victoria eventually bowing to pressure and implementing changes to legislation in an effort to increase transparency.
There are traditionally four types of auction that are used for the allocation of a single item:
English auction, also known as an open ascending price auction. This type of auction is arguably the most common form of auction in use today. Participants bid openly against one another, with each subsequent bid required to be higher than the previous bid. An auctioneer may announce prices, bidders may call out their bids themselves (or have a proxy call out a bid on their behalf), or bids may be submitted electronically with the highest current bid publicly displayed. In some cases a maximum bid might be left with the auctioneer, who may bid on behalf of the bidder according to the bidder's instructions. The auction ends when no participant is willing to bid further, at which point the highest bidder pays their bid. Alternatively, if the seller has set a minimum sale price in advance (the 'reserve' price) and the final bid does not reach that price the item remains unsold. Sometimes the auctioneer sets a minimum amount by which the next bid must exceed the current highest bid. The most significant distinguishing factor of this auction type is that the current highest bid is always available to potential bidders. The English auction is commonly used for selling goods, most prominently antiques and artwork, but also secondhand goods and real estate.
Dutch auction also known as an open descending price auction. In the traditional Dutch auction the auctioneer begins with a high asking price for some quantity of like items; the price is lowered until a participant is willing to accept the auctioneer's price for some quantity of the goods in the lot or until the seller's reserve price is met. If the first bidder does not purchase the entire lot, the auctioneer continues lowering the price until all of the items have been bid for or the reserve price is reached. Items are allocated based on bid order; the highest bidder selects their item(s) first followed by the second highest bidder, etc. In a modification, all of the winning participants pay only the last announced price for the items that they bid on. The Dutch auction is named for its best known example, the Dutch tulip auctions. ("Dutch auction" is also sometimes used to describe online auctions where several identical goods are sold simultaneously to an equal number of high bidders.) In addition to cut flower sales in the Netherlands, Dutch auctions have also been used for perishable commodities such as fish and tobacco. The Dutch auction is not widely used, except in market orders in stock or currency exchanges, which are functionally identical.
Sealed first-price auction or blind auction, also known as a first-price sealed-bid auction (FPSB). In this type of auction all bidders simultaneously submit sealed bids so that no bidder knows the bid of any other participant. The highest bidder pays the price they submitted. This type of auction is distinct from the English auction, in that bidders can only submit one bid each. Furthermore, as bidders cannot see the bids of other participants they cannot adjust their own bids accordingly. From the theoretical perspective, this kind of bid process has been argued to be strategically equivalent to the Dutch auction. However, empirical evidence from laboratory experiments has shown that Dutch auctions with high clock speeds yield lower prices than FPSB auctions. What are effectively sealed first-price auctions are commonly called tendering for procurement by companies and organisations, particularly for government contracts and auctions for mining leases.
Vickrey auction, also known as a sealed-bid second-price auction. This is identical to the sealed first-price auction except that the winning bidder pays the second-highest bid rather than his or her own. Vickrey auctions are extremely important in auction theory, and commonly used in automated contexts such as real-time bidding for online advertising, but rarely in non-automated contexts.
Most auction theory revolves around these four "standard" auction types. However, many other types of auctions exist, including:
All-pay auction is an auction in which all bidders must pay their bids regardless of whether they win. The highest bidder wins the item. All-pay auctions are primarily of academic interest, and may be used to model lobbying or bribery (bids are political contributions) or competitions such as a running race.
Auction by the candle. A type of auction, used in England for selling ships, in which the highest bid laid on the table by the time a burning candle goes out wins.
Bidding fee auction, also known as a penny auction, often requires that each participant must pay a fixed price to place each bid, typically one penny (hence the name) higher than the current bid. When an auction's time expires, the highest bidder wins the item and must pay a final bid price. Unlike in a conventional auction, the final price is typically much lower than the value of the item, but all bidders (not just the winner) will have paid for each bid placed; the winner will buy the item at a very low price (plus price of rights-to-bid used), all the losers will have paid, and the seller will typically receive significantly more than the value of the item.
Buyout auction is an auction with an additional set price (the 'buyout' price) that any bidder can accept at any time during the auction, thereby immediately ending the auction and winning the item. If no bidder chooses to utilize the buyout option before the end of bidding the highest bidder wins and pays their bid. Buyout options can be either temporary or permanent. In a temporary-buyout auction the option to buy out the auction is not available after the first bid is placed. In a permanent-buyout auction the buyout option remains available throughout the entire auction until the close of bidding. The buyout price can either remain the same throughout the entire auction, or vary throughout according to rules or simply as decided by the seller.
Combinatorial auction is any auction for the simultaneous sale of more than one item where bidders can place bids on an "all-or-nothing" basis on "packages" rather than just individual items. That is, a bidder can specify that he or she will pay for items A and B, but only if he or she gets both. In combinatorial auctions, determining the winning bidder(s) can be a complex process where even the bidder with the highest individual bid is not guaranteed to win. For example, in an auction with four items (W, X, Y and Z), if Bidder A offers $50 for items W & Y, Bidder B offers $30 for items W & X, Bidder C offers $5 for items X & Z and Bidder D offers $30 for items Y & Z, the winners will be Bidders B & D while Bidder A misses out because the combined bids of Bidders B & D is higher ($60) than for Bidders A and C ($55).
Japanese auction is a variation of the English auction. When the bidding starts no new bidders can join, and each bidder must continue to bid each round or drop out. It has similarities to the ante in Poker.
Mystery auction is a type of auction where bidders bid for boxes or envelopes containing unspecified or underspecified items, usually on the hope that the items will be humorous, interesting, or valuable. In the early days of eBay's popularity, sellers began promoting boxes or packages of random and usually low-value items not worth selling by themselves.
No-reserve auction (NR), also known as an absolute auction, is an auction in which the item for sale will be sold regardless of price. From the seller's perspective, advertising an auction as having no reserve price can be desirable because it potentially attracts a greater number of bidders due to the possibility of a bargain. If more bidders attend the auction, a higher price might ultimately be achieved because of heightened competition from bidders. This contrasts with a reserve auction, where the item for sale may not be sold if the final bid is not high enough to satisfy the seller. In practice, an auction advertised as "absolute" or "no-reserve" may nonetheless still not sell to the highest bidder on the day, for example, if the seller withdraws the item from the auction or extends the auction period indefinitely, although these practices may be restricted by law in some jurisdictions or under the terms of sale available from the auctioneer.
Reserve auction is an auction where the item for sale may not be sold if the final bid is not high enough to satisfy the seller; that is, the seller reserves the right to accept or reject the highest bid. In these cases a set 'reserve' price known to the auctioneer, but not necessarily to the bidders, may have been set, below which the item may not be sold. If the seller announces to the bidders the reserve price, it is a public reserve price auction. In contrast, if the seller does not announce the reserve price before the sale but only after the sale, it is a secret reserve price auction. The reserve price may be fixed or discretionary. In the latter case, the decision to accept a bid is deferred to the auctioneer, who may accept a bid that is marginally below it. A reserve auction is safer for the seller than a no-reserve auction as they are not required to accept a low bid, but this could result in a lower final price if less interest is generated in the sale.
Reverse auction is a type of auction in which the roles of the buyer and the seller are reversed, with the primary objective to drive purchase prices downward. While ordinary auctions provide suppliers the opportunity to find the best price among interested buyers, reverse auctions give buyers a chance to find the lowest-price supplier. During a reverse auction, suppliers may submit multiple offers, usually as a response to competing suppliers’ offers, bidding down the price of a good or service to the lowest price they are willing to receive. By revealing the competing bids in real time to every participating supplier, reverse auctions promote “information transparency”. This, coupled with the dynamic bidding process, improves the chances of reaching the fair market value of the item.
Senior auction is a variation on the all-pay auction, and has a defined loser in addition to the winner. The top two bidders must pay their full final bid amounts, and only the highest wins the auction. The intent is to make the high bidders bid above their upper limits. In the final rounds of bidding, when the current losing party has hit their maximum bid, they are encouraged to bid over their maximum (seen as a small loss) to avoid losing their maximum bid with no return (a very large loss).
Silent auction is a variant of the English auction in which bids are written on a sheet of paper. At the predetermined end of the auction, the highest listed bidder wins the item. This auction is often used in charity events, with many items auctioned simultaneously and "closed" at a common finish time. The auction is "silent" in that there is no auctioneer selling individual items, the bidders writing their bids on a bidding sheet often left on a table near the item. At charity auctions, bid sheets usually have a fixed starting amount, predetermined bid increments, and a "guaranteed bid" amount which works the same as a "buy now" amount. Other variations of this type of auction may include sealed bids. The highest bidder pays the price he or she submitted.
Top-up auction is a variation on the all-pay auction, primarily used for charity events. Losing bidders must pay the difference between their bid and the next lowest bid. The winning bidder pays the amount bid for the item, without top-up.
Walrasian auction or Walrasian tâtonnement is an auction in which the auctioneer takes bids from both buyers and sellers in a market of multiple goods. The auctioneer progressively either raises or drops the current proposed price depending on the bids of both buyers and sellers, the auction concluding when supply and demand exactly balance. As a high price tends to dampen demand while a low price tends to increase demand, in theory there is a particular price somewhere in the middle where supply and demand will match.
Amsterdam auctions, a type of premium auction which begins as an English auction. Once only two bidders remain, each submits a sealed bid. The higher bidder wins, paying either the first or second price. Both finalists receive a premium: a proportion of the excess of the second price over the third price (at which English auction ended).
Other auctions: Other auction types also exist, such as Simultaneous Ascending Auction Anglo-Dutch auction, Private value auction,Common value auction
The range of auctions that take place is extremely wide and one can buy almost anything, from a house to an endowment policy and everything in-between. Some of the recent developments have been the use of the Internet both as a means of disseminating information about various auctions and as a vehicle for hosting auctions themselves.
Here is a short description of the most common types of auction.
Government, bankruptcy and general auctions are amongst the most common auctions to be found today. A government auction is simply an auction held on behalf of a government body generally at a general sale. Here one may find a vast range of materials that have to be sold by various government bodies, for example: HM Customs & Excise, the Official Receiver, the Ministry of Defence, local councils and authorities, liquidators, as well as material put up for auction by companies and members of the public. Also in this group you will find auctions ordered by executors who are entering the assets of individuals who have perhaps died in testate (those who have died without leaving a will), or in debt. One of the most interesting bodies to look out for at auction is HM Customs & Excise who may be entering at auction various items seized from smugglers, fraudsters and racketeers.
Motor vehicle and car auctions – Here one can buy anything from an accident-damaged car to a brand new top-of-the-range model; from a run-of-the-mill family saloon to a rare collector's item.
Police auctions are generally held at general auctions although some forces use online sites including eBay to dispose of lost and found and seized goods.
Land and property auctions – Here one can buy anything from an ancient castle to a brand new commercial premises.
Antiques and collectibles auctions hold the opportunity for viewing a huge array of items.
Internet auctions – With a potential audience of millions the Internet is the most exciting part of the auction world at the moment. Led by sites in the United States but closely followed by UK auction houses, specialist Internet auctions are springing up all over the place, selling everything from antiques and collectibles to holidays, air travel, brand new computers, and household equipment.
Titles – One can buy a manorial title at auction. Every year several of these specialist auctions take place. However, it is important to note that manorial titles are not the same thing as peerages, and have been described as "meaningless" in the modern world.
Insurance policies – Auctions are held for second-hand endowment policies. The attraction is that someone else has already paid substantially to set up the policy in the first place, and one will be able (with the help of a financial calculator) to calculate its real worth and decide whether it is worth taking on.
On-site auctions – Sometimes when the stock or assets of a company are simply too vast or too bulky for an auction house to transport to their own premises and store, they will hold an auction within the confines of the bankrupt company itself. Bidders could find themselves bidding for items which are still plugged in, and the great advantage of these auctions taking place on the premises is that they have the opportunity to view the goods as they were being used, and may be able to try them out. Bidders can also avoid the possibility of goods being damaged whilst they are being removed as they can do it or at least supervise the activity.
Private treaty sales – Occasionally, when looking at an auction catalogue some of the items have been withdrawn. Usually these goods have been sold by 'private treaty'. This means that the goods have already been sold off, usually to a trader or dealer on a private, behind-the-scenes basis before they have had a chance to be offered at the auction sale. These goods are rarely in single lots – photocopiers or fax machines would generally be sold in bulk lots.
Charity auctions - Used by nonprofits, higher education, and religious institutions as a method to raise funds for a specific mission or cause both through the act of bidding itself, and by encouraging participants to support the cause and make personal donations. Often, these auctions are linked with another charity event like a benefit concert.
Each type of auction has its specific qualities such as pricing accuracy and time required for preparing and conducting the auction. The number of simultaneous bidders is of critical importance. Open bidding during an extended period of time with many bidders will result in a final bid that is very close to the true market value. Where there are few bidders and each bidder is allowed only one bid, time is saved, but the winning bid may not reflect the true market value with any degree of accuracy. Of special interest and importance during the actual auction is the time elapsed from the moment that the first bid is revealed to the moment that the final (winning) bid has become a binding agreement.
Auctions can differ in the number of participants:
In a supply (or reverse) auction, m sellers offer a good that a buyer requests
In a demand auction, n buyers bid for a good being sold
Prices are bid by buyers and asked (or offered) by sellers. Auctions may also differ by the procedure for bidding (or asking, as the case may be):
In an open auction participants may repeatedly bid and are aware of each other's previous bids.
In a closed auction buyers and/or sellers submit sealed bids
Auctions may differ as to the price at which the item is sold, whether the first (best) price, the second price, the first unique price or some other. Auctions may set a reservation price which is the least/maximum acceptable price for which a good may be sold/bought.
Without modification, auction generally refers to an open, demand auction, with or without a reservation price (or reserve), with the item sold to the highest bidder.
Auctions are publicly and privately seen in several contexts and almost anything can be sold at auction. Some typical auction arenas include the following:
For the sale of consumer second-hand goods of all kinds, particularly farm (equipment) and house clearances and online auctions.
Sale of industrial machinery, both surplus or through insolvency.
In commodities auctions, like the fish wholesale auctions
In livestock auctions where sheep, cattle, pigs and other livestock are sold. Sometimes very large numbers of stock are auctioned, such as the regular sales of 50,000 or more sheep during a day in New South Wales.
In wool auctions where international agents purchase lots of wool
Thoroughbred horses, where yearling horses and other bloodstock are auctioned.
In legal contexts where forced auctions occur, as when one's farm or house is sold at auction on the courthouse steps. (Property seized for non-payment of property taxes, or under foreclosure, is sold in this manner.)
Travel tickets. One example is SJ AB in Sweden auctioning surplus at Tradera (Swedish eBay).
Holidays. A variety of holidays are available for sale online particularly via eBay. Vacation rentals appear to be most common. Many holiday auction websites have launched but failed.
Self storage units. In certain jurisdictions, if a storage facility's tenant fails to pay his/her rent, the contents of his/her locker(s) may be sold at a public auction. Several television shows focus on such auctions, including Storage Wars and Auction Hunters.
Although less publicly visible, the most economically important auctions are the commodities auctions in which the bidders are businesses even up to corporation level. Examples of this type of auction include:
Private electronic markets using combinatorial auction techniques to continuously sell commodities (coal, iron ore, grain, water...) to a pre-qualified group of buyers (based on price and non-price factors)
Timber auctions, in which companies purchase licenses to log on government land
Timber allocation auctions, in which companies purchase timber directly from the government Forest Auctions
Electricity auctions, in which large-scale generators and consumers of electricity bid on generating contracts
Environmental auctions, in which companies bid for licenses to avoid being required to decrease their environmental impact. These include auctions in emissions trading schemes.
Debt auctions, in which governments sell debt instruments, such as bonds, to investors. The auction is usually sealed and the uniform price paid by the investors is typically the best non-winning bid. In most cases, investors can also place so called non-competitive bids, which indicates an interest to purchase the debt instrument at the resulting price, whatever it may be
Auto auctions, in which car dealers purchase used vehicles to retail to the public.
Produce auctions, in which produce growers have a link to localized wholesale buyers (buyers who are interested in acquiring large quantities of locally grown produce).
An 18th century Chinese meiping porcelain vase. Porcelain has long been a staple at art sales. In 2005, a 14th-century Chinese porcelain piece was sold by the Christie's for £16 million, or US$28 million. It set a world auction record for any ceramic work of art.
Katehakis and Puranam provided the first model
for the problem of optimal bidding for a firm that in each period procures items to meet a random demand by participating in a finite sequence of auctions. In this model an item valuation derives from the sale of the acquired items via their demand distribution, sale price, acquisition cost, salvage value and lost sales. They established monotonicity properties for the value function and the optimal dynamic bid policy. They also provided a model
for the case in which the buyer must acquire a fixed number of items either at a fixed buy-it-now price in the open market or by participating in a sequence of auctions. The objective of the buyer is to minimize his expected total cost for acquiring the fixed number of items.
Bid shading is placing a bid which is below the bidder's actual value for the item. Such a strategy risks losing the auction, but has the possibility of winning at a low price. Bid shading can also be a strategy to avoid the Winner's curse.
Chandelier or rafter bidding
This is the practice, especially by high-end art auctioneers, of raising false bids at crucial times in the bidding in order to create the appearance of greater demand or to extend bidding momentum for a work on offer. To call out these nonexistent bids auctioneers might fix their gaze at a point in the auction room that is difficult for the audience to pin down. The practice is frowned upon in the industry. In the United States, chandelier bidding is not illegal. In fact, an auctioneer may bid up the price of an item to the reserve price, which is an unstated amount the consignor will not sell the item for. However, the auction house is required to disclose this information.
In the United Kingdom this practice is legal on property auctions up to but not including the reserve price, and is also known as off-the-wall bidding.
Whenever bidders at an auction are aware of the identity of the other bidders there is a risk that they will form a "ring" or "pool" and thus manipulate the auction result, a practice known as collusion. By agreeing to bid only against outsiders, never against members of the "ring", competition becomes weaker, which may dramatically affect the final price level. After the end of the official auction an unofficial auction may take place among the "ring" members. The difference in price between the two auctions could then be split among the members. This form of a ring was used as a central plot device in the opening episode of the 1979 British television series The House of Caradus, 'For Love or Money', uncovered by Helena Caradus on her return from Paris.
A ring can also be used to increase the price of an auction lot, in which the owner of the object being auctioned may increase competition by taking part in the bidding him or herself, but drop out of the bidding just before the final bid. In Britain and many other countries, rings and other forms of bidding on one's own object are illegal. This form of a ring was used as a central plot device in an episode of the British television series Lovejoy (series 4, episode 3), in which the price of a watercolour by the (fictional) Jessie Webb is inflated so that others by the same artist could be sold for more than their purchase price.
In an English auction, a dummy bid is a bid made by a dummy bidder acting in collusion with the auctioneer or vendor, designed to deceive genuine bidders into paying more. In a first-price auction, a dummy bid is an unfavourable bid designed so as not to become the winning bid. (The bidder does not want to win this auction, but he or she wants to make sure to be invited to the next auction).
In Australia, a dummy bid (shill, schill) is a criminal offence, but a vendor bid or a co-owner bid below the reserve price is permitted, if clearly declared as such by the auctioneer. These are all official legal terms in Australia, but may have other meanings elsewhere. A co-owner is one of two or several owners (who disagree among themselves).
In Sweden and many other countries there are no legal restrictions, but it will severely hurt the reputation of an auction house that knowingly permits any other bids except genuine bids. If the reserve is not reached this should be clearly declared.
In South Africa auctioneers can use their staff or any bidder to raise the price as long as its disclosed before the auction sale. The Auction Alliance controversy focused on vendor bidding and it was proven to be legal and acceptable in terms of the South African consumer laws.
Suggested opening bid (SOB)
There will usually be an estimate of what price the lot will fetch. In an ascending open auction it is considered important to get at least a 50-percent increase in the bids from start to finish. To accomplish this, the auctioneer must start the auction by announcing a suggested opening bid (SOB) that is low enough to be immediately accepted by one of the bidders. Once there is an opening bid, there will quickly be several other, higher bids submitted. Experienced auctioneers will often select an SOB that is about 45 percent of the (lowest) estimate. Thus there is a certain margin of safety to ensure that there will indeed be a lively auction with many bids submitted. Several observations indicate that the lower the SOB, the higher the final winning bid. This is due to the increase in the number of bidders attracted by the low SOB.
A chi-squared distribution shows many low bids but few high bids. Bids "show up together"; without several low bids there will not be any high bids.
Another approach to choosing an SOB: The auctioneer may achieve good success by asking the expected final sales price for the item, as this method suggests to the potential buyers the item's particular value. For instance, say an auctioneer is about to sell a $1,000 car at a sale. Instead of asking $100, hoping to entice wide interest (for who wouldn't want a $1,000 car for $100?), the auctioneer may suggest an opening bid of $1,000; although the first bidder may begin bidding at a mere $100, the final bid may more likely approach $1,000.
Appraisal – an estimate of an item's worth, usually performed by an expert in that particular field.
Auction block - a raised platform on which the auctioneer shows the items to be auctioned; can also be slang for the auction itself.
Auction chant - a rhythmic repetition of numbers and "filler words" spoken by an auctioneer in the process of conducting an auction.
Auction fever - an emotional state elicited in the course of one or more auctions that causes a bidder to deviate from an initially chosen bidding strategy.
Auction house - the company operating the auction (i.e., establishing the date and time of the auction, the auction rules, determining which item(s) are to be included in the auction, registering bidders, taking payments, and delivering the goods to the winning bidders).
Auctioneer - the person conducting the actual auction. They announce the rules of the auction and the item(s) being auctioned, call and acknowledging bids made, and announce the winner. They generally will call the auction using auction chant.
The auctioneer may operate his/her own auction house (and thus perform the duties of both auctioneer and auction house), and/or work for another house.
Auctioneers are frequently regulated by governmental entities, and in those jurisdictions must meet certain criteria to be licensed (be of a certain age, have no disqualifying criminal record, attend auction school, pass an examination, and pay a licensing fee).
Auctioneers may or may not (depending on the laws of the jurisdiction and/or the policies of the auction house) bid for their own account, or if they do must disclose this to bidders at the auction; similar rules may apply for employees of the auctioneer or the auction house.
Bidding - the act of participating in an auction by offering to purchase an item for sale.
Buyer's premium – a fee paid by the buyer to the auction house; it is typically calculated as a percentage of the winning bid and added on it. Depending on the jurisdiction the buyer's premium, in addition to the sales price, may be subject to VAT or sales tax.
Buyout price – A price that, if accepted by a bidder, immediately ends the auction and awards the item to him/her (an example is eBay's BuyItNow feature).
Choice - a form of bidding whereby a number of identical or similar items are bid at a single price for each item
Clearance rate – The percentage of items that sell over the course of the auction.
Commission – a fee paid by a consignor/seller to the auction house; it is typically calculated as a percentage of the winning bid and deducted from the gross proceeds due to the consignor/seller.
Consignee and consignor - as pertaining to auctions, the consignor (also called the seller, and in some contexts the vendor) is the person owning the item to be auctioned or the owner's representative, while the consignee is the auction house. The consignor maintains title until such time that an item is purchased by a bidder and the bidder pays the auction house.
Dummy bid (a/k/a "ghost bid") - a false bid, made by someone in collusion with the seller or auctioneer, designed to create a sense of increased interest in the item (and, thus, increased bids).
Dynamic closing - a mechanism used to prevent auction sniping, by which the closing time is extended for a small period to allow other bidders to increase their bids.
eBidding – electronic bidding, whereby a person may make a bid without being physically present at an auction (or where the entire auction is taking place on the Internet).
Earnest money deposit (a/k/a "caution money deposit" or "registration deposit") – a payment that must be made by prospective bidders ahead of time in order to participate in an auction.
The purpose of this deposit is to deter non-serious bidders from attending the auction; by requiring the deposit, only bidders with a genuine interest in the item(s) being sold will participate.
This type of deposit is most often used in auctions involving high-value goods (such as real estate).
The winning bidder has his/her earnest money applied toward the final selling price; the non-winners have theirs refunded to them.
Escrow – an arrangement in which the winning bidder pays the amount of his/her bid to a third party, who in turn releases the funds to the seller under agreed-upon terms.
Hammer price – the nominal price at which a lot is sold; the winner is responsible for paying any additional fees and taxes on top of this amount
Increment – a minimum amount by which a new bid must exceed the previous bid. An auctioneer may decrease the increment when it appears that bidding on an item may stop, so as to get a higher hammer price. Alternatively, a participant may offer a bid at a smaller increment, which the auctioneer has the discretion to accept or reject.
Lot – either a single item being sold, or a group of items (which may or may not be similar or identical, such as a "job lot" of manufactured goods) that are bid on as one unit.
If the lot is for a group of items, the price paid is for the entire lot and the winning bidder must take all the items sold.
Variants on a group lot bid include "choice" and "times the money" (see definitions for each).
Example: An auction has five bath fragrance gift baskets where bidding is "lot", and the hammer price is USD $5. The winner must pay $5 (as the price is for the whole lot) and must take all five baskets.
Minimum bid – The smallest opening bid that will be accepted.
A minimum bid can be as little as USD$0.01 (one cent) depending on the auction.
If no one bids at the initial minimum bid, the auctioneer may lower the minimum bid so as to create interest in the item.
The minimum bid differs from a reserve price (see definition), in that the auctioneer sets the minimum bid, while the seller sets the reserve price (if desired).
"New money" - a new bidder, joining bidding for an item after others have bid against each other.
No reserve auction (a/k/a "absolute auction") – an auction in which there is no minimum acceptable price; so long as the winning bid is at least the minimum bid, the seller must honor the sale.
Outbid (also spelled "out-bid" or "out bid") – to bid higher than another bidder.
Opening bid – the first bid placed on a particular lot. The opening bid must be at least the minimum bid, but may be higher (e.g., a bidder may shout out a considerably larger bid than minimum, to discourage other bidders from bidding).
Paddle - a numbered instrument used to place a bid
Protecting a Market - when a dealer places a bid on behalf of an artist he or she represents or otherwise has a financial interest in ensuring a high price. Artists represented by major galleries typically expect this kind of protection from their dealers.
Proxy bid (a/k/a "absentee bid") – a bid placed by an authorized representative of a bidder who is not physically present at the auction.
Proxy bids are common in auctions of high-end items, such as art sales (where the proxy represents either a private bidder who does not want to be disclosed to the public, or a museum bidding on a particular item for its collection).
If the proxy is outbid on an item during the auction, the proxy (depending on the instructions of the bidder) may either increase the bid (up to a set amount established by the bidder) or be required to drop out of the bidding for that item.
A proxy may also be limited by the bidder in the total amount to spend on items in a multi-item auction.
Relisting - re-selling an item that has already been sold at auction, but where the buyer did not take possession of the item (for example, in a real estate auction, the buyer did not provide payment by the closing date).
Reserve price – A minimum acceptable price established by the seller prior to the auction, which may or may not be disclosed to the bidders.
If the winning bid is below the reserve price, the seller has the right to reject the bid and withdraw the item(s) being auctioned.
The reserve price differs from a minimum bid (see definition), in that the seller sets the reserve price (if desired), while the auctioneer sets the minimum bid.
Sealed bid - a submitted bid whose value is unknown to competitors.
Sniping – the act of placing a bid just before the end of a timed auction, thus giving other bidders no time to enter new bids.
Specialist - on-staff trained professionals who put together the auction
The "three Ds" death, divorce, or debt - sometimes a reason for an item to be sold at an auction
Vendor bid - a bid by the person selling the item. The bid is sometimes a dummy bid (see definition) but not always.
White Glove Sale - an auction in which every single lot is sold
^William S. Walsh A Handy Book Of Curious Information Comprising Strange Happenings in the Life of Men and Animals, Odd Statistics, Extraordinary Phenomena and Out of the Way Facts Concerning the Wonderlands of the Earth. Philadelphia: J.B. Lippincott Co., 1913. 63-64.
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The 2008 Indian Premier League season was the inaugural season of the Indian Premier League, established by the BCCI in 2007. The season commenced on 18 April 2008 with the final match held on 1 June 2008. The competition started with a double round robin group stage, in which each of the 8 teams played a home match and an away match against every other team. These matches were followed by two semi-finals and a final.In a match which went down to the last ball, Rajasthan Royals defeated Chennai Super Kings in the final to win the title, with Yusuf Pathan named the player of the match and Shane Watson adjudged the player of the tournament. Sohail Tanvir won the purple cap for being the top wicket-taking bowler while Shaun Marsh won the orange cap for leading run-scorer in the tournament. Shreevats Goswami was awarded the best under-19 player award and the special award for Fair Play was won by the Chennai Super Kings.
Apple Computer 1, also known later as the Apple I, or Apple-1, is a desktop computer released by the Apple Computer Company (now Apple Inc.) in 1976. It was designed and hand-built by Steve Wozniak. Wozniak's friend Steve Jobs had the idea of selling the computer. The Apple I was Apple's first product, and to finance its creation, Jobs sold his only motorized means of transportation, a VW Microbus, for a few hundred dollars, and Steve Wozniak sold his HP-65 calculator for $500; however, Wozniak said that Jobs planned to use his bicycle if necessary. It was demonstrated in July 1976 at the Homebrew Computer Club in Palo Alto, California.Production was discontinued on September 30, 1977, after the June 10, 1977 introduction of its successor, the Apple II, which Byte magazine referred to as part of the "1977 Trinity" of personal computing (along with the PET 2001 and the TRS-80).
The card game auction bridge, the third step in the evolution of the general game of bridge, was developed from straight bridge (i.e. bridge whist) in 1904. The precursor to contract bridge, its predecessors were whist and bridge whist.
Auction bridge trick scoring, bonus scoring, and penalty scoring are radically different from contract bridge, and there is no concept of vulnerability in auction bridge.
Bidding rules are nearly the same, although in contract bridge bidding many complex artificial bids and bidding systems have evolved.
An auction rate security (ARS) typically refers to a debt instrument (corporate or municipal bonds) with a long-term nominal maturity for which the interest rate is regularly reset through a dutch auction. Since February 2008, most such auctions have failed, and the auction market has been largely frozen. In late 2008, investment banks that had marketed and distributed auction rate securities agreed to repurchase most of them at par.
Banksy is an anonymous England-based street artist, vandal, political activist, and film director. His satirical street art and subversive epigrams combine dark humour with graffiti executed in a distinctive stenciling technique. His works of political and social commentary have been featured on streets, walls, and bridges of cities throughout the world. Banksy's work grew out of the Bristol underground scene, which involved collaborations between artists and musicians. Banksy says that he was inspired by 3D, a graffiti artist who later became a founding member of the English musical group Massive Attack.Banksy displays his art on publicly visible surfaces such as walls and self-built physical prop pieces. Banksy no longer sells photographs or reproductions of his street graffiti, but his public 'installations' are regularly resold, often even by removing the wall they were painted on. A small number of Banksy's works are officially, non-publicly, sold through Pest Control. Banksy's documentary film Exit Through the Gift Shop (2010) made its debut at the 2010 Sundance Film Festival. In January 2011, he was nominated for the Academy Award for Best Documentary for the film. In 2014, he was awarded Person of the Year at the 2014 Webby Awards.
Christie's is a British auction house. It was founded in 1766 by James Christie. Its main premises are on King Street, St James's, in London and in the Rockefeller Center in New York City. The company is owned by Groupe Artémis, the holding company of François-Henri Pinault. Sales in 2015 totalled £4.8 billion (US$7.4 billion). In 2017 the Salvator Mundi was sold for $450.3 million at Christie's, and which at that time was the highest price ever paid for a single painting at an auction.
Contract bridge, or simply bridge, is a trick-taking card game using a standard 52-card deck. In its basic format, it is played by four players in two competing partnerships, with partners sitting opposite each other around a table. Millions of people play bridge worldwide in clubs, tournaments, online and with friends at home, making it one of the world's most popular card games, particularly among seniors. The World Bridge Federation (WBF) is the governing body for international competitive bridge, with numerous other bodies governing bridge at the regional level.
The game consists of several deals, each progressing through four phases. The cards are dealt to the players, and then the players auction or bid to take the contract, specifying how many tricks the partnership receiving the contract (the declaring side) needs to take to receive points for the deal. During the auction, partners communicate information about their hand, including its overall strength and the length of its suits, although conventions for use during play also exist. The cards are then played, the declaring side trying to fulfill the contract, and the defenders trying to stop the declaring side from achieving its goal. The deal is scored based on the number of tricks taken, the contract, and various other factors which depend to some extent on the variation of the game being played.Rubber bridge is the most popular variation for casual play, but most club and tournament play involves some variant of duplicate bridge, in which the cards are not re-dealt on each occasion, but the same deal is played by two or more sets of players (or "tables") to enable comparative scoring. For competition level, so called IMP score is of high significance.
Diablo III is a dungeon crawler action role-playing game developed and published by Blizzard Entertainment. It is the third installment in the Diablo franchise, and was released for Microsoft Windows and OS X in May 2012, the PlayStation 3 and Xbox 360 in September 2013, the PlayStation 4 and Xbox One in August 2014, and the Nintendo Switch in November 2019. In the game, players choose one of seven character classes – Barbarian, Crusader, Demon Hunter, Monk, Necromancer, Witch Doctor, or Wizard – and are tasked with defeating the Lord of Terror, Diablo.
An expansion pack, titled Reaper of Souls, was released for the PC versions of the game in March 2014, and was later released for consoles as part of the Diablo III: Ultimate Evil Edition version in August 2014. The Diablo III: Rise of the Necromancer pack was released for the Windows, macOS, and latest-generation console editions of the game in June 2017. Diablo III: Eternal Collection, combining Reaper of Souls and Rise of the Necromancer, was released for PlayStation 4 and Xbox One in June 2017, and for the Nintendo Switch in November 2018.
Diablo III received critical acclaim, although its always-on DRM feature was criticized. The game set a new record for fastest-selling PC game by selling over 3.5 million copies in the first 24 hours of its release, and was the best selling PC game of 2012, selling over 12 million copies. By August 2015, that number had grown to over 30 million.
eBay Inc. ( EE-bay) is an American multinational e-commerce corporation based in San Jose, California that facilitates consumer-to-consumer and business-to-consumer sales through its website. eBay was founded by Pierre Omidyar in the autumn of 1995, and became a notable success story of the dot-com bubble. eBay is a multibillion-dollar business with operations in about 30 countries, as of 2011. The company manages the eBay website, an online auction and shopping website in which people and businesses buy and sell a wide variety of goods and services worldwide. The website is free to use for buyers, but sellers are charged fees for listing items after a limited number of free listings, and again when those items are sold.In addition to eBay's original auction-style sales, the website has evolved and expanded to include: instant "Buy It Now" shopping; shopping by Universal Product Code, ISBN, or other kind of SKU number (via Half.com, which was shut down in 2017); online classified advertisements (via Kijiji, or eBay Classifieds); online event ticket trading (via StubHub); and other services. EBay previously offered online money transfers as part of its services (via PayPal, which was a wholly owned subsidiary of eBay from 2002 to 2015).
Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.Formally, a mortgage lender (mortgagee), or other lienholder, obtains a termination of a mortgage borrower (mortgagor)'s equitable right of redemption, either by court order or by operation of law (after following a specific statutory procedure).Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt. While this equitable right exists, it is a cloud on title and the lender cannot be sure that they can repossess the property. Therefore, through the process of foreclosure, the lender seeks to immediately terminate the equitable right of redemption and take both legal and equitable title to the property in fee simple. Other lien holders can also foreclose the owner's right of redemption for other debts, such as for overdue taxes, unpaid contractors' bills or overdue homeowner association dues or assessments.
The foreclosure process as applied to residential mortgage loans is a bank or other secured creditor selling or repossessing a parcel of real property after the owner has failed to comply with an agreement between the lender and borrower called a "mortgage" or "deed of trust". Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property. When the process is complete, the lender can sell the property and keep the proceeds to pay off its mortgage and any legal costs, and it is typically said that "the lender has foreclosed its mortgage or lien". If the promissory note was made with a recourse clause and if the sale does not bring enough to pay the existing balance of principal and fees, then the mortgagee can file a claim for a deficiency judgment. In many states in the United States, items included to calculate the amount of a deficiency judgment include the loan principal, accrued interest and attorney fees less the amount the lender bid at the foreclosure sale.
Girl with Balloon (also, Balloon Girl or Girl and Balloon) is a 2002-started London series of stencil murals by the graffiti artist Banksy, depicting a young girl with her hand extended toward a red heart-shaped balloon carried away by the wind. The first work was on Waterloo Bridge, and other murals were around London, though none remain there. Banksy has several times used variants of this design to support social campaigns: in 2005 about the West Bank barrier, in 2014 about the Syrian refugee crisis, and also about the 2017 UK election. A 2017 Samsung poll ranked Girl with Balloon as the United Kingdom's number one favourite artwork.
In 2018, a framed copy of the work spontaneously shredded during an auction, by way of a mechanical device Banksy had hidden in the frame. Banksy authenticated he was responsible for the shredding and gave the altered piece a new name, Love Is in the Bin. Sotheby said it was "the first work in history ever created during a live auction."
Initial public offering (IPO) or stock market launch is a type of public offering in which shares of a company are sold to institutional investors and usually also retail (individual) investors; an IPO is underwritten by one or more investment banks, who also arrange for the shares to be listed on one or more stock exchanges. Through this process, colloquially known as floating, or going public, a privately held company is transformed into a public company. Initial public offerings can be used: to raise new equity capital for the company concerned; to monetize the investments of private shareholders such as company founders or private equity investors; and to enable easy trading of existing holdings or future capital raising by becoming publicly traded enterprises.
After the IPO, shares traded freely in the open market are known as the free float. Stock exchanges stipulate a minimum free float both in absolute terms (the total value as determined by the share price multiplied by the number of shares sold to the public) and as a proportion of the total share capital (i.e., the number of shares sold to the public divided by the total shares outstanding). Although IPO offers many benefits, there are also significant costs involved, chiefly those associated with the process such as banking and legal fees, and the ongoing requirement to disclose important and sometimes sensitive information.
Details of the proposed offering are disclosed to potential purchasers in the form of a lengthy document known as a prospectus. Most companies undertake an IPO with the assistance of an investment banking firm acting in the capacity of an underwriter. Underwriters provide several services, including help with correctly assessing the value of shares (share price) and establishing a public market for shares (initial sale). Alternative methods such as the Dutch auction have also been explored and applied for several IPOs.
Numismatics is the study or collection of currency, including coins, tokens, paper money and related objects. While numismatists are often characterised as students or collectors of coins, the discipline also includes the broader study of money and other payment media used to resolve debts and the exchange of goods. Early money used by people is referred to as "Odd and Curious", but the use of other goods in barter exchange is excluded, even where used as a circulating currency (e.g., cigarettes in prison). The Kyrgyz people used horses as the principal currency unit and gave small change in lambskins; the lambskins may be suitable for numismatic study, but the horses are not. Many objects have been used for centuries, such as cowry shells, precious metals, cocoa beans, large stones and gems.
Today, most transactions take place by a form of payment with either inherent, standardized, or credit value. Numismatic value is the value in excess of the monetary value conferred by law, which is known as the collector value.Economic and historical studies of money's use and development are an integral part of the numismatists' study of money's physical embodiment.
An online auction is an auction which is held over the internet. Online auctions come in many different formats, but most popularly they are ascending English auctions, descending Dutch auctions, first-price sealed-bid, Vickrey auctions, or sometimes even a combination of multiple auctions, taking elements of one and forging them with another. The scope and reach of these auctions have been propelled by the Internet to a level beyond what the initial purveyors had anticipated. This is mainly because online auctions break down and remove the physical limitations of traditional auctions such as geography, presence, time, space, and a small target audience. This influx in reachability has also made it easier to commit unlawful actions within an auction. In 2002, online auctions were projected to account for 30% of all online e-commerce due to the rapid expansion of the popularity of the form of electronic commerce.
Pay-per-click (PPC), also known as cost per click (CPC), is an internet advertising model used to direct traffic to websites, in which an advertiser pays a publisher (typically a website owner or a network of websites) when the ad is clicked.
Pay-per-click is commonly associated with first-tier search engines (such as Google AdWords and Bing Ads). With search engines, advertisers typically bid on keyword phrases relevant to their target market. In contrast, content sites commonly charge a fixed price per click rather than use a bidding system. PPC "display" advertisements, also known as "banner" ads, are shown on web sites with related content that have agreed to show ads and are typically not pay-per-click advertising. Social networks such as Facebook and Twitter have also adopted pay-per-click as one of their advertising models.
However, websites can offer PPC ads. Websites that utilize PPC ads will display an advertisement when a keyword query matches an advertiser's keyword list that has been added in different ad groups, or when a content site displays relevant content. Such advertisements are called sponsored links or sponsored ads, and appear adjacent to, above, or beneath organic results on search engine results pages, or anywhere a web developer chooses on a content site.The PPC advertising model is open to abuse through click fraud, although Google and others have implemented automated systems to guard against abusive clicks by competitors or corrupt web developers.
A public auction is an auction held on behalf of a government in which the property to be auctioned is either property owned by the government, or property which is sold under the authority of a court of law or a government agency with similar authority.
When the term "government auction" is used it generally means that specific auctioneers and agents are contracted to deal with stock that needs to be liquidated by various government bodies.
Sotheby's is a British founded American multinational corporation headquartered in New York City. One of the world's largest brokers of fine and decorative art, jewelry, real estate, and collectibles, Sotheby's operation is divided into three segments: auction, finance, and dealer. The company's services range from corporate art services to private sales. It is named after one of its cofounders, John Sotheby.
Sotheby's is the world's fourth oldest auction house in continuous operation, with 90 locations in 40 countries. As of December 2011, the company had 1,446 employees worldwide. It is the world's largest art business with global sales in 2011 totalling $5.8 billion.Sotheby's was established on 11 March 1744 in London. The American holding company was initially incorporated in August 1983 in Michigan. In June 2006, Sotheby's Holdings, Inc. reincorporated in the State of Delaware and was renamed Sotheby's. In July 2016, Chinese insurance company Taikang Life became Sotheby's largest shareholder.
The Scream is the popular name given to a composition created by Norwegian Expressionist artist Edvard Munch in 1893. The original German title given by Munch to his work was Der Schrei der Natur (The Scream of Nature), and the Norwegian title is Skrik (Shriek). The agonised face in the painting has become one of the most iconic images of art, seen as symbolising the anxiety of modern man.
Munch recalled that he had been out for a walk at sunset when suddenly the setting sunlight turned the clouds "a blood red". He sensed an ‘infinite scream passing through nature'. Scholars have located the spot to a fjord overlooking Oslo, and have suggested other explanations for the unnaturally orange sky, ranging from the effects of a volcanic eruption to a psychological reaction by Munch to his sister’s commitment at a nearby lunatic asylum.
Munch created four versions in paint and pastels, as well as a lithograph stone from which several prints survive. Both of the painted versions have been stolen, but since recovered. One of the pastel versions commanded the fourth highest nominal price paid for a painting at auction.
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