Auctions

Question 1

what is an auction aggregator?

How does it work?

Answer 1

An auction aggregator is when you use computer programs to search thousands of Web auction sites, and aggregate information on products, bids, auction duration, and big increments.

Question 2

what is a reverse auction? when does it work best?

Answer 2

• bidder places item they want to buy and the price/ a request for quote.
• potential suppliers bid on the item, reducing the price sequentially
• winning supplier awarded contract for lowest price.
• Works best in B2B or G2B setting

Question 3

Section B: Discuss several puzzles of online bidder behaviour and provide explanations for each of them.

Answer 3

Winner’s curse

Shill bidding

Siphoning

Squatting

Rings

Sniping

Question 4

what is an auction

Answer 4

the process of buying and selling things by offering them up for bid, taking bids, and then selling the item to the highest bidder,

Question 5

what is an english auction?

Answer 5

participants bid openly against eachother, with each bid higher than the previous one.

auction ends when no participant is willing to bid further.

Question 6

what is a dutch auction?

Answer 6

auctioneer begins with high asking price which is lowered until some participant is willing to accept the auctioneers price.

Question 7

What is first-price, sealed bid/discriminatory auction?

Answer 7

sealed and hidden from other bidders. winner pays the exact amount he bids.

Question 8

what is second-price sealed bid/ vickrey auction

Answer 8

sealed and hidden. winner pays the second-highest amount bid

Question 9

what is winner’s curse?

Answer 9

bidder may pay more than the true worth of the item

Question 10

What are the main types of online auctions?

Answer 10

group buying

proxy bidding

Question 11

what is a group buying auction?

Answer 11

e.g. groupon

group buying of products/services at dynamically adjusted prices based on high volume purchases

Question 12

what is proxy bidding?

Answer 12

Like eBay

bidder specifies maximum bid and increment is predetermined.
bid will be placed by proxy up until maximum limit is exceeded by another bidder

Question 13

what is sniping?

Answer 13

when auctions have an end time, bidders/computers place bids at the last minute, preventing any other bidders from responding.

Question 14

what is squatting?

Answer 14

bid early and often

- enter an auction early and stay until the end

Question 15

what are the abuses of ascending auctions?

Answer 15

shill bidding - abuse by seller
tries to bid up the price

siphoning - con artists lure bidders off original site by offering good at a lower price

bid retraction - abuse by bidders.
false high bid to reveal current highest value and then retract it.

Question 16

advantages of online auctions

Answer 16

seller

• increased revenue from broadened bidder base
• can sell many at a time and frequently

buyer

• price determined by market
• unique items and collectables
• may find bargains

auctioneer

• higher repeat purchases
• ‘stickiness’ to website’

Question 17

limitations of online auctions

Answer 17

minimal security - some c2c auctions do not use encryption, paypal addresses this

possibility of fraud

• buyers bid and do not pay
• buyers cannot see item so may be faulty when it arrives
• buyers claim that item has not arrived