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In theory, this feature of the Dutch auction leads to more aggressive bidding, as those who (in this example) bid 5.115% receive the bonds at the lower price/higher yield of 5.130%. [citation needed] A variation on the Dutch auction, OpenIPO, was developed by Bill Hambrecht and has been used for a number of US IPOs. Auctions have been used for ...
The terms Vickrey auction and second-price sealed-bid auction are, in this case only, equivalent and used interchangeably. In the case of multiple identical goods, the bidders submit inverse demand curves and pay the opportunity cost. [4] Vickrey auctions are much studied in economic literature but uncommon in practice.
Auction theory is a branch of applied economics that deals with how bidders act in auctions and researches how the features of auctions incentivise predictable outcomes. Auction theory is a tool used to inform the design of real-world auctions. Sellers use auction theory to raise higher revenues while allowing buyers to procure at a lower cost.
Revenue equivalence is a concept in auction theory that states that given certain conditions, any mechanism that results in the same outcomes (i.e. allocates items to the same bidders) also has the same expected revenue.
An Anglo-Dutch auction starts as an English or Japanese auction and then continues as a Dutch auction with a reduced number of bidders. [ 81 ] [ 82 ] A French auction is a preliminary sealed-bid auction before the actual auction, whose reserve price it determines.
While a traditional Dutch Auction starts at a high bid which will then decrease, a Reverse Dutch Auction works the opposite way as it starts at a low price and then gradually increases over time. [25] It contains a list of items that buyers want to procure and the price rises after fixed intervals until a reserved price is reached.
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OpenIPO is a modified Dutch auction which allows shares of an initial public offering (IPO) to be allocated impartially. It is a variation on the traditional way that shares are sold during the IPO process and results in all successful bidders paying the same price per share.