| Online Auction involves the selling and | | | | product/service. |
| buying of goods by offering them up for | | | | 4. Sealed-bid second-price auction: |
| bids and consequently selling them to | | | | Also known as Vickery auction. It is |
| the highest bidder on the internet. | | | | exactly similar to sealed bid first |
| Origin of auctions can be traced back to | | | | price auction, except that the highest |
| the 500 B.C. | | | | bidder pays the second highest amount |
| There are various types of online | | | | and not the highest bid. This is the |
| auctions. The following are the most | | | | bidding system used by eBay. |
| prominent ones: | | | | 5. All-pay auction: |
| 1. Chinese Auction: | | | | In this auction type all the bidders |
| The other name of Chinese auction is | | | | have to pay their bidding amount |
| tricky tray and pick-a-price. It is | | | | irrespective of the fact that they have |
| usually held at charity or fund raising | | | | won or not. |
| events. The bidders buy tickets and the | | | | 6. English Auction: |
| chance of winning is proportional to the | | | | This is the most common auction type |
| number of tickets purchased. The origin | | | | round the globe. In this type of |
| of Chinese bidding is still ambiguous. | | | | auction, a reserve price is fixed for |
| 2. Dutch Auction: | | | | the goods and the customers offer larger |
| In this type of bidding, the auctioneer | | | | and larger bid. Finally, the product is |
| declares a high price for the product or | | | | sold to the highest bidder. English |
| service and subsequently, it is lowered | | | | auction is the most common auction type |
| depending on whether the participants | | | | in the US and most of the online auction |
| are willing to pay the pre determined | | | | sites use the English auction type. The |
| amount. | | | | biggest disadvantage of the English |
| 3. Sealed-bid first price auction: | | | | auction, which makes it a little |
| In this type of bidding, all the bidders | | | | unpopular is something known as |
| simultaneously submit their bidding | | | | "winner's curse". English auctions are |
| amount. Know bidder knows the bidding | | | | often complicated and most interesting |
| amount of his/her competitor. The one | | | | because of strategies like snipping and |
| who bids the highest amount gets the | | | | proxy bidding. |