1. Auctions Yunon Chuang

2. What are auctions? n Auction Markets: –traders transact directly against the orders of other traders by communication through a single centralized intermediacy –Public sales to concentrate supply and demand and, discover prices of products and services

3. When Auctions Succeed n If posted offer and private negotiations are inefficient or fail –The good or service is unique and/or costs and quality cannot be determined –There is no shared understanding of attributes or criteria by which to determine the cost –Bargaining costs are high relative to the cost of the good –Unique goods where the number of buyers are uncertain

4. Forms of Auctions n English Auction n Dutch Auction n Offer Auction n Bid auction

5. English Auctions n Sequentially increasing bids until one active bidder remains n bidders always know the level of the current best bid n Used for artwork and some valuable items, such as Sotheby’s (http://www.sothebys.com ), and Christie’s (http://www.christies.com)

6. Dutch Auctions n The auctioneer lowers the offer price sequentially (represented by a going clock) until a buyer agrees to pay for the offer price (set by the stoppage of the clock). n Bidders have to choose how high to bid without knowing the others’ decisions

7. Dutch Auction: Trick of game n When the announced price progressively lowered, the probability of obtaining a gain grow. However, due to potential competitors increase, the probability of securing this gain is diminishing as well.

8. First Price Sealed Bid Auctions n or called Tender n Opposite of offer auction n Buyer can make bids sequentially n sellers can only indicate that a bid is accepted.

9. Second Price Sealed Bid Auctions n An institution in which sellers can make offers sequentially n Buyers are able to accept any offer, but not to make any bids

10. Auction and Electronic commerce

11. Web Characteristics --- new dimension for auctions n Lower transaction costs n better reach to potential sellers and bidders n improving search/find capabilities n New auction methods--multidimensional auction –“Customized auction”: price, item amounts, quality, delivery spec, other contractual specs n The usage of intelligent agents- –spiders

12. Web-based Auction Theories n Multidimensional auctions n Product Presentation and impact of multimedia tech n Role of quality of web-based public or private info in Web-based auctions n Knowledge and Design the Website and form of Web-based auctions

13. Electronic Auctions n Expanded Reach –from co-location to distribution in time or place –access to new customer base n New ways of signaling and sharing non- price information (chat, messaging, notes) n New ways of organizing key inter- related transaction processes

14. Electronic Auctions n Potential of changing the way worth of goods is set by transforming valuation and related transaction processes n Enable new forms of social and other interactions

15. eBay-- www.ebay.com n English Auction n More than 1,000 categories of items available for bids n person-to-person auctions better security: providing built-in safeguards on Word of mouth counts: seller information page gives positive and negative remarks of sellers or bidders n Verified user program at $5 fee to ensure everybody traceable and legally accountable n Real bargains on last-minutes items on Going-Going-gone page

16. Bidding Rule in ebay n n First register to be an eBay member. First register n n Find an item you'd like to bid on by browsing through listings. n n When you find something you want, Enter the amount of your bid, and click the "review bid" button in the bidding area. n n Send the bid

17. Bidding Rule in ebay (con’t) n n As the bidder waits for the auction to close (this is usually several days), (s)he'll receive a daily email telling the bidder if (s)he is the high bidder or if (s)he been outbid by another eBay member. n n Going, going, gone! When the auction closes, if the user is the high bidder, (s)he must email the seller within three business days to claim the item. This signifies that (s)he is the winner

19. Selling Rules in eBay n Register first n n Set up the selling account. Place credit card on file with eBayPlace credit card on file n n Gather the info the seller need before preparing the listing:   The item description   the URL (web site address) for any photos   the category the merchandise will be listed under

20. Selling Rules in eBay (con’t) n n In Sell Your Item form, fill in the info, and reviews and submits the listing.Sell Your Item n n When your auction closes, the seller has to contact the winning bidder or bidders within three business days. The seller is to confirm the final cost, including any shipping charges, and tell them where to send payment. When the bidder meets your payment terms, the seller fulfill your end of the agreement by sending them the item. The auction forms a binding contract between the seller and the winning bidder or bidders. n n The seller’s item is finally sold