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An Online Auction is the buying and selling of products by the process of bidding and then offering the goods to the highest bidder on the internet. There are various types of online auctions that are practiced around the globe but the most common and widely accepted one is the English auction. In this type of auction, a reserve price is fixed for the goods and the customers offer larger and larger bid. Finally, the product is sold to the highest bidder. English auction is the most common auction type in the US and most of the online auction sites use the English auction type. Many renowned online auction houses like Ebay use the English auction. The different customers offer higher and higher amount against each other, with each bid being higher than the previous one. The auction completes when the bid reaches its maximum value and no participant is willing to offer a higher amount. In some cases, when the reserve price is not revealed, the bid ends if no one is willing to bid an amount higher than the reserve price. The item, in this case, remains unsold. The most traditional type of English auction includes the use of a candle. In this type, the winning bid was the last one which was offered just before a candle died out. The biggest disadvantage of the English auction, which makes it a little unpopular is something known as “winner’s curse”. The buyers sometimes, in the heat of the moment, due to competition and various other reasons such as inexperience and absence of level headedness, offer a price that is way higher than the true net worth of the good. It is indeed profitable for the seller but many a times it creates a problem for the bidder when he realizes his mistake, but nothing can be undone. The second disadvantage of the English auction is the requirement of constant and proper communication which sometimes can be a little difficult and expensive. English auctions are often complicated and most interesting because of strategies like snipping and proxy bidding. In snipping, a bidder observes the bidding of a couple of days and waits for the bidding to almost end. He then offers a higher bid. He refrains from participating in the bid actively as he is not willing to create interest and thereby driving up the price. In proxy bidding, as the name suggests, a person is able to set a maximum price to continue bidding even without active participation. The pros and cons of the English auction make it an interesting game.
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Written by Nikola Jankovic. Find top house auctions on www.house-auction.net
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