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