English Style of Auctions Question Answer 2022

Running head: AUCTIONS
Auctions
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Running head: AUCTIONS
Question 1
The English style of auction is an auction in which an item is sold through an opening bid
that is suggested by the seller and which the price generally increases.it is an open outcry process
in which the buyers place bids on the item and the seller accepts the higher bid as it comes. This
is done until the item is bought by the highest bidder.in this style, there is a reserve price that is
set and which has to be met by the bidders. The seller can decided to take the item of the market
if the reserve price has not been met or if no buyer places an economically fair bid ( Hubbard, &
Paarsch,2016).
The Dutch style of auction is a form of auction in which the price of an auction is reduced
until that time that a buyer will be found.it is commonly known as the descending price auction
in the sense that they set the price at a higher bid than the original value of the said items which
is then reduced until the items is purchased. The item however has a minimum price that the
seller cannot ago under at the time of auctioning.it is referred to the Dutch auction as it is
normally used in the flower business in Holland (Mochón, & Sáez,2015).
The two types of auction are comparable in the sense that they both aim to sell a
particular asset. The end game of the auction is to ensure that the items are disposed of.
The major difference between the two types of auction is the process if bidding. The
English auction favors the increasing price system while the Dutch auction favors the decreasing
price auction. The price at which the item is sold for the English auction is always higher while
that of the Dutch auction is relatively low.

Running head: AUCTIONS
Also, the quantities that are sold in the two auctions differ a lot. For the English auction,
there is only one quantity that is being sold and which the bidders are fighting for. On the other
hand, the Dutch auction is one that involves a number of identical items to be sold. This is in the
case of flowers whose quantities are huge (Alaei, Hartline, Niazadeh,, Pountourakis, &
Yuan,2018).
B
The sealed bid first price is a type of auction in which the bidder only gets one
opportunity to carry out his bid.in this form of auction, each of the bidders write their prices in a
piece of paper and submit it to the auctioneer. The person who will have indicated the highest
price will be declared the winner and the bidding process will close ( Bergemann, Brooks, &
Morris,2017).
The Vickery auction is a sealed bid in which the bidders are required to submit their bids
without the knowledge of each other bids. The unique thing with Vickery is that the price that
will be paid for the item is the second highest bid rather than the winning bid.
The sealed bid first price and the Vickery auction contrast in the sense that one takes the
highest bid that has been submitted while the other goes for the second highest bid. Also, the
Vickery auction allows an individual to bid only to his maximum potential unlike the sealed bid
in which it exposes one to bid more than he would have wished for in order to obtain the item
( Carroll, & Segal,2018).
The two auctions are comparable in the sense that none of the other bidders is able to
know exactly what the amount that the other bidder is bidding and thus none of the bidders is
able to feel disadvantage by the bidding process.