MBA 6053
Economics for Managers
MBA 6053-19N-SP21L-S4
Unit VI Essay
Introduction
Auctions have been around for hundreds of years. In the long history of auctions items,
services and people can both be found to be sold to bidders. Auctions bring both buyers and
sellers to a common area to exchange things at an agreed upon price. Some auctions start the
beginning price exceptionally low and other items may be placed at a much higher starting point.
Auctions are not only valuable for both sellers and buyers but also a particularly good source of
information. In modern times auctions are used to sell a variety of goods from homes, vehicles,
services, art, and estates. This essay will go over the different types of auctions, the benefits, and
disadvantages, and how the price of the items being auctioned affect their value.
Different Auctions
When people think of auctions, they think of a fast-speaking announcer giving a
description of the auctioned item followed by various bidders volleying for the item and the
announcer settling on the highest bidder to complete the final sale to. There are two types of
auctions – Oral and Second Price. Oral auctions are just like they sound and is probably the most
familiar type with an announcer keeping track of the various bidders and closing the bid on the
highest bidder. Consumers may be ‘outbid’ by other auction participants, but they are free to
reciprocate with an even higher bid of their own (Haubl & Leszczyc 2019).
Second-price auctions are auctions where bidders place one bid each in the amount
closest to what they think the value of the item is and then the highest bidder wins the item;
however, only pays what the second highest bid was. In short, in second-price auction there is
not the back and forth like with oral auctions. Typically, oral auctions are conducted in person
Economics for Managers
MBA 6053-19N-SP21L-S4
Unit VI Essay
Introduction
Auctions have been around for hundreds of years. In the long history of auctions items,
services and people can both be found to be sold to bidders. Auctions bring both buyers and
sellers to a common area to exchange things at an agreed upon price. Some auctions start the
beginning price exceptionally low and other items may be placed at a much higher starting point.
Auctions are not only valuable for both sellers and buyers but also a particularly good source of
information. In modern times auctions are used to sell a variety of goods from homes, vehicles,
services, art, and estates. This essay will go over the different types of auctions, the benefits, and
disadvantages, and how the price of the items being auctioned affect their value.
Different Auctions
When people think of auctions, they think of a fast-speaking announcer giving a
description of the auctioned item followed by various bidders volleying for the item and the
announcer settling on the highest bidder to complete the final sale to. There are two types of
auctions – Oral and Second Price. Oral auctions are just like they sound and is probably the most
familiar type with an announcer keeping track of the various bidders and closing the bid on the
highest bidder. Consumers may be ‘outbid’ by other auction participants, but they are free to
reciprocate with an even higher bid of their own (Haubl & Leszczyc 2019).
Second-price auctions are auctions where bidders place one bid each in the amount
closest to what they think the value of the item is and then the highest bidder wins the item;
however, only pays what the second highest bid was. In short, in second-price auction there is
not the back and forth like with oral auctions. Typically, oral auctions are conducted in person
