auctions

An auction is a public sale in which goods or services are sold to the highest bidder. The mechanism is designed to reveal a price through competitive bidding, and formats differ in how bids are submitted and how the winner is determined.

Common formats include English auctions, where bids rise in ascending order until no higher bid is offered; Dutch auctions, where the price starts high and is lowered until a participant accepts; and sealed-bid formats, where bids are submitted privately and the highest bid wins, sometimes with the highest bid paying the second-highest amount in a Vickrey-style arrangement. Online auctions combine traditional formats with digital platforms, often offering live or timed events and automatic bidding tools.

Participants include sellers (or consignors), bidders, and auction houses or platforms. A licensed auctioneer may conduct live events, while platforms provide rules, timelines, and payment processing. Terms such as reserve price, bid increments, buyer’s premiums, and payment and possession terms regulate outcomes and bidder expectations.

Auctions are used across sectors, including art, antiques, real estate, vehicles, collectibles, and government securities. They also appear in procurement as reverse auctions, where suppliers compete to offer the lowest price. Auctions support price discovery, liquidity, and transparent allocation but pose risks such as fraud, shill bidding, or information asymmetries. Regulatory frameworks often address licensing, consumer protections, and fair bidding practices.

Historically, auctions have ancient and medieval precedents and have evolved with commerce. The rise of online platforms has broadened access and participation, reinforcing auctions as a versatile mechanism for allocating scarce goods and services.