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However, to this day, this experience makes me nervous about organising telephone bids and wherever possible I always try to attend, or request somebody else attend on my behalf. (Source: Network Auctions, 2013) Proxy bidding A proxy bid is where you instruct the auctioneer to bid on your behalf at the auction. This requires similar administration as a telephone bid (ID documents, 10 per cent deposit and buyer’s premium) and will involve completing a proxy bid form. This works in a similar way to the telephone bid and will require you to plan your maximum bid in advance. The key difference with a proxy bid is that no further communication with you is required – the auction house will bid on your behalf in the room. This has the same disadvantages as the telephone as it means the auction house knows in advance the maximum bid from an interested party.
Psychology of the auction room The look of an auction sale room The feel of an auction sale room Bid pace and opening prices ‘Auction fever’ Role of the auctioneer Auctioneer tactics Auctioneer cues: how to watch the auctioneer Auctioneer code of conduct How to bid for an auction property Have a clear ‘eyeball’ position Attracting the auctioneer’s attention and bidding styles When to bid? How much to bid? Alternative methods to bid Telephone bidding Proxy bidding By someone else Online Do a dummy auction run Test experience: practise buying a property at auction Practise research – but do it in real life! Unsold property Property withdrawn Chapter 8: After Auction: What Next? Exchange of contracts The race to complete: on auction day After the auction . . . a frantic few days What happens if I am delayed or can’t complete? Are there any get-outs?
TIP Many property auctioneers can appear intimidating when standing high on the rostrum – but remember they need you, the buyer – to help them do their job. Auctioneer code of conduct The auctioneer reserves the right to bid on behalf of various parties. This is usually included in the conditions of sale and it is a point which will be mentioned in the opening speech. These various parties may include any telephone or proxy bids received, and it does also include the person selling the lot. This right to bid on behalf of the vendor is included in the Sale of Land by Auction Act, 1867. What this means, in practice, is that if an auctioneer is auctioning a lot but the level of bidding has not reached the reserve price, the auctioneer can ‘take a bid off the wall’ on behalf of the vendor to help move bidding closer to the reserve price.
Reinventing the Bazaar: A Natural History of Markets by John McMillan
accounting loophole / creative accounting, Albert Einstein, Andrei Shleifer, Anton Chekhov, Asian financial crisis, congestion charging, corporate governance, crony capitalism, Dava Sobel, Deng Xiaoping, experimental economics, experimental subject, fear of failure, first-price auction, frictionless, frictionless market, George Akerlof, George Gilder, global village, Hernando de Soto, I think there is a world market for maybe five computers, income inequality, income per capita, informal economy, invisible hand, Isaac Newton, job-hopping, John Harrison: Longitude, John von Neumann, land reform, lone genius, manufacturing employment, market clearing, market design, market friction, market microstructure, means of production, Network effects, new economy, offshore financial centre, pez dispenser, pre–internet, price mechanism, profit maximization, profit motive, proxy bid, purchasing power parity, Ronald Coase, Ronald Reagan, sealed-bid auction, second-price auction, Silicon Valley, spectrum auction, Stewart Brand, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, War on Poverty, Xiaogang Anhui farmers, yield management
This practice works to the seller’s disadvantage: it produces lower prices than an open-ended auction would, for the auction might close with some bidders left wanting to bid higher but unable to. How can sniping be prevented? eBay’s solution is to accept proxy bids. Bidders may confidentially tell eBay’s automated bidding agent the maximum they are prepared to bid. If the current bid level is smaller than a proxy bid, eBay’s computer automatically submits a bid on behalf of the proxy bidder, a small increment above the current high bid. The agent stays in the bidding up to the level of the proxy bid. Thus the proxy bidder could win, depending on the competition, at any price up to the level of the proxy bid. The price the proxy bidder pays is the second-highest bid plus a bid increment. eBay’s proxy bidding does not always succeed in eliminating sniping, however. Savvy bidders still often hold their bids to the last second, in the hope of preventing a bidding war.
Airbnb, airport security, Al Roth, Andrei Shleifer, attribution theory, autonomous vehicles, barriers to entry, Brownian motion, centralized clearinghouse, clean water, conceptual framework, constrained optimization, continuous double auction, deferred acceptance, Donald Trump, Edward Glaeser, experimental subject, first-price auction, framing effect, frictionless, fundamental attribution error, George Akerlof, Goldman Sachs: Vampire Squid, helicopter parent, Internet of things, invisible hand, Isaac Newton, iterative process, Jean Tirole, Jeff Bezos, Johann Wolfgang von Goethe, John Nash: game theory, John von Neumann, Joseph Schumpeter, late fees, linear programming, Lyft, market clearing, market design, market friction, medical residency, multi-sided market, mutually assured destruction, Nash equilibrium, Occupy movement, Peter Thiel, pets.com, pez dispenser, pre–internet, price mechanism, price stability, prisoner's dilemma, profit motive, proxy bid, RAND corporation, ride hailing / ride sharing, Robert Shiller, Robert Shiller, Ronald Coase, school choice, school vouchers, sealed-bid auction, second-price auction, second-price sealed-bid, sharing economy, Silicon Valley, spectrum auction, Steve Jobs, Tacoma Narrows Bridge, technoutopianism, telemarketer, The Market for Lemons, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, transaction costs, two-sided market, uranium enrichment, Vickrey auction, winner-take-all economy
(There is always a lot of action in the last few minutes of an auction. Proxy bids were meant to spare shoppers the trouble of tuning in through the flurry of activity that takes place as an auction closes, but it hasn’t really worked out that way.11) Among this set of near-identical listings, compare, say, the sale of a buy-it-now-for-$200 iPod to an auction listing that ultimately goes for $180. If the researchers have done their job right in matching otherwise identical listings, the 10 percent discount on the auction listing is telling us something about how customers value the convenience of dealing with fixed price rather than auction sales, even when the latter are offered with the convenience of Vickrey-style proxy bids.12 No matter how much you simplify a Vickrey auction, it still carries an inherent anxiety and nuisance of entering bids on items.
You might, for example, only want a new TV if you also got an Xbox, and only want the thirty-inch TV if you don’t get the forty-inch one.8 But maybe that wouldn’t matter so much anyway: instead of having to make a special trip to the mall to put in your pen-and-paper bids, you could simply enter an online bid for one TV, see what happens, then try for another. It wouldn’t be overly time consuming or cumbersome, as you need never check back or alter your bid. This is, in fact, the way it works for eBay auction listings today. Much as stamp collectors mailed in proxy bids to dealer William P. Brown’s New York auction house, you go to the web page for an item you’d like to bid on, enter your walk-away price, and forget about it till the auction ends. eBay takes care of raising your bid as necessary, and by Vickrey’s reasoning, you can be sure that if the value you placed on the item is high enough, you’ll get it. The internet promised not just a more efficient way of selling but a new model of commerce where the economy would effectively become one big Vickrey auction with bidders remotely entering their willingness to pay for whatever they found on eBay or any one of the competing sites that were springing up around the internet.
In his 2001 book Digital Dealing, he predicted—with reasonable accuracy, it turns out—that “auctions will predominate for collectibles, surplus equipment, industrial commodities, many securities, and sports and airline tickets.”)9 Auctions weren’t meant to be the only part of this internet bazaar, but they promised to be a big player in it. Pierre Omidyar’s eBay was the first major online auctioneer, but the whiff of potential profits soon brought competition from other pioneers like Yahoo and Amazon. Yet the promise of an internet auction takeover has long since fizzled. Amazon’s auction site never took off, while Yahoo shuttered its auction business by 2007. It’s true that you can still register a proxy bid for any one of the millions of auctions listed on eBay today, but while the company is still known to many as an online auctioneer, by the end of 2012 less than 15 percent of listings used an auction format, down from nearly 100 percent just ten years earlier. The rest are plain-vanilla fixed-price sales, just as one would see listed from a third-party seller on Amazon, which makes buying things on eBay fundamentally not that different from the way people have done their shopping for the past century or so.
Distrust That Particular Flavor by William Gibson
AltaVista, British Empire, cognitive dissonance, cuban missile crisis, edge city, informal economy, means of production, megastructure, pattern recognition, proxy bid, telepresence, Vannevar Bush, Whole Earth Catalog
On the night of the auction, after having carefully considered bidding strategy (and this with no prior experience of bidding in any kind of auction), I placed a bid for considerably less than the two-hundred-dollar limit I’d set for myself. That put me in high-bidder position. And then I sat there. What if, it occurred to me, someone noticed my Croton in the auction’s last few minutes and decided to grab it? eBay’s system of proxy bidding encourages buyers to offer the most they’re willing to pay for an item—their “maximum” bid. My maximum bid was a hundred and forty dollars. But on eBay you don’t necessarily end up having to pay your maximum bid. In an auction house, if you raised your hand to bid two hundred dollars on a watch, you’d be on the hook for that amount. But on eBay, each auction has a set “bid increment”—with some as little as five cents.
But I did buy another watch, from London, an oddly named Tweka with a two-tone copper dial. It went for around a hundred fifty dollars and had been listed as “NOS,” which means new old stock, something that supposedly has sat in the back of a jeweler’s drawer since 1952. Very nice, after a trip to Otto, but still not the watch . . . eBay is a cross between a swap meet in cyberspace and a country auction with computer-driven proxy bidding. The auctioneer is one of eBay’s servers. Buyers don’t pay anything to eBay; they just pay sellers for the items they buy. Sellers, however, pay a fee on each item they list, and another fee if it sells. You can set this up so that your eBay seller’s account comes off your credit card. I doubt if anyone’s seller account amounts to much in a given month, but eBay moves a lot of items. There’s a sense of taking part in an evolving system, here.
Affordable Care Act / Obamacare, Airbnb, algorithmic trading, barriers to entry, Berlin Wall, bitcoin, Build a better mousetrap, centralized clearinghouse, computer age, crowdsourcing, deferred acceptance, desegregation, experimental economics, first-price auction, Flash crash, High speed trading, income inequality, Internet of things, invention of agriculture, invisible hand, Jean Tirole, law of one price, Lyft, market clearing, market design, medical residency, obamacare, proxy bid, road to serfdom, school choice, sealed-bid auction, second-price auction, second-price sealed-bid, Silicon Valley, spectrum auction, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, The Wealth of Nations by Adam Smith, two-sided market
Internet communications used to be even less private than they are now, but even today you need to be careful with some of your personal information. PayPal solved the payment privacy problem for eBay and other Internet markets by providing a payment mechanism that doesn’t require you to type in your credit card information for each transaction. But you may be reluctant to reveal other kinds of information, too, and that can interfere with the operation of the market. For example, in an eBay auction, you’re invited to submit a proxy bid of the maximum amount you’re willing to pay. eBay promises to use that number to bid on your behalf, but only as high as needed for you to be the winning bidder. Of course, you have to trust eBay to use the information as it promises (and not just charge you the highest price you’re willing to pay however the bidding went). Since this kind of trust is essential to eBay’s business model, I’m not surprised that I’ve never heard any suggestion that eBay has ever abused it.
See market design diabetes, 38–39, 42 dialysis, 41, 42, 51, 208, 211 differentiation, 18–20 Diners Club, 23 dormitory room allocation, 35 Dorosin, Neil, 161, 165 Douglas, John, 7 drugs, illegal, 114, 213–14 early transactions, 59–65 in college admissions, 171–72 college bowl games and, 59–65 definition of, 59 in gastroenterology fellowships, 75–78 for judicial clerkships, 69–70, 90–98 in law firm recruiting, 65–68 on marriage, 70–74 in school selection, 73–74 self-control and, 67–68, 74–78 eBay, 104–5 feedback system of, 117–19 proxy bidding in, 119–21 safety of, 116 economics definition of, 4 game theory in, 10–11, 32–41 on matching, 4–5 economist job market, 173–75, 244 education. See also college admissions; residency programs for doctors; school matching in democracy, 166 early admissions in, 73–74 exploding offers in, 98–99 marriage age and, 72 Ph.D. offers in, 77–78 public value of, 125 Edwards, Valerie, 130 electronic order books, 83–84 Elias, Julio, 245 email, 169, 175–77 E-mini S&P 500 futures (ES), 82–89 equilibrium, 77 Ethiopia Commodity Exchange, 17–18 experimental economics, 77, 127–28, 176, 209, 244 experiments, 209, 213, 241 expert guides, 147–48 exploding offers, 9–10, 67, 98–99 empowerment of candidates and, 76–80 in gastroenterology fellowships, 76–78 for judicial clerkships, 91–99 in law firm recruiting, 67, 68 to medical residents, 136 for orthopedic surgeon fellows, 78–80 to Ph.D. candidates, 77–78 in school admissions, 73–74 exploitation, 203 failures, market abandonment of, 167 causes vs. symptoms of, 90–98 child marriage and, 70–74 from congestion, 92–93 cultural change and, 78–80 difficulty of limiting, 67–68, 74, 79–80, 90–98 from early transactions, 57–80 exploding offers and, 67–68 finding solutions for, 133–34 in gastroenterology fellowships, 75–78 in judicial clerkships, 69–70, 79, 90–98 in law firm recruiting, 65–68 in orthopedic surgeon hiring, 78–80 prevalence of, 73 safety, trust, and simplicity and, 113–30 self-control and, 67–68, 74–78 from speed, 81–99 fairness, 25 Falke, Roberta, 38–39 Farmer City, Illinois, 115 farmers’ markets, 20, 74 farming, 198 Federal Communications Commission, 186–89 Federal Law Clerk Hiring Plan, 93–98 fellowships, gastroenterology, 75–78 fertility tourism, 201–2 Fiesta Bowl, 61 financial markets, 82–89 flash crash of 2010, 84–85 Fleming, Alexander, 133–34 Florey, Howard, 134 Food Facility Inspection Report, 220–21 Football Bowl Association, 62–63 football bowl games, 59–65 Franklin, Benjamin, 200–201 Fréchette, Guillaume, 64, 237 free markets, 7, 12–13, 217, 226–28.