Would auction prices be higher if the Dutch auction method were used??
Ed62
Posts: 857 ✭✭
If so, why isn't anyone using it?
Ed
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The seller sets an estimated range, say $20-24 per share for 10 million shares.
Bidders place bids for a certain number of shares at a specified maximum price per share.
(which can be above or below the estimated range)
The seller determines the lowest bid price that will result in all 10 million shares being sold.
(let's say it is $25)
Every bidder with a bid at that $25 price or higher pays $25 per share.
If I bid $24 for 1000 shares, $26 for 800 shares and $30 for 700 shares, I would
buy 1500 shares for $25. My bid for 1000 @ $24 would be cancelled.
Such a system might work for large lots of coins like Silver American Eagles but does not
really lend itself to distinct individual coins.
In a regular auction, the game is "How high will you go?"
I think there's more "auction fever" in a regular auction, which is better for consignors and Auctioneers.
Check out the Southern Gold Society
There is something like a large clock that begins at, say, $1000 and slowly winds down -- past $900, past $800, etc. (you get the picture).
Each bidder is at a desk with a remote button to press at his highest bid. If the first bidder hits his button at, for example, $768.00 he wins the 'lot' ( a very large box of cut flowers) at $768.00. So the high bidder will win the lot at his maximum bid; and all the other potential bidders are shut out without any bids.
Under the 'bidding up' method used in coin auctions, the high bidder will win the lot at one increment over the second highest bidder.
GrandAm
Man - "Would you do it for $1 mil?"
Lady - "Sure".
Man - "Would you do it for $100?"
Lady - "What kind of person do you think I am??".
Man - "I already know - only the price needs to be determined".
Lance.
On the other hand, it's interesting to think about why the Dutch process was used in the first place. My guess is that the auctioneers figured the most important thing for their market (and for their own businesses) was that the bidders have the best chance to flip their purchases for a quick profit, and the Dutch process is ideal for that. But coins are a more solid and lasting form of value than tulip bulbs, so coin bidders do not need as much encouragement.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
... in a reverse auction, it's all silence at the higher prices, and when it gets low enough, you have to be the one to speak up, but you'll never know if you could have waited and gotten it cheaper, so even if you "win" the item, you will always wonder if you overpaid.
Another type auction you sometimes hear about is when they have a number of the same thing at a fixed price, and folks just buy them until they're gone, but that seems a lot like a regular sale rather than an auction
edited to add: see also "sealed bid" auctions, which has some advantages and disadvantages for all parties. No one will "bid you up" though, if it's honest, you make your best price bid and either win it or you don't.
Liberty: Parent of Science & Industry
Consider if a Dutch auction were used for the coin discussed in this 'Wow!' thread. Sheet (any sheet) on the coin was a few hundred bucks, yet it ended up closing at over 12 times that amount, which surprised lots of folks. Would you expect a Dutch auction to start at - what four or five grand? - so that the coin brings the same money? I don't see that happening. If it opens at $1000 and gets an immediate bid, then you do what? Go up from there?
Not very workable with coins, IMO.
That's not related to a "Dutch" auction, it's just a little food for thought while I'm here before work.
``https://ebay.us/m/KxolR5
<< <i>Didn't eBay use to do these? >>
EBay had something they called a Dutch Auction, but it had nothing to do with a Dutch Auction.
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