We don’t hear too much about the different types of On Line auctions anymore as many features are baked in to newer tools today! And very few understand the psychological models that are used within these modern bidding frameworks. One of the oldest types of on line auctions is the Vickrey reverse auction?
According to Wiktionary the Vickrey reverse auction is named after a Canadian professor of economics named William Vickrey (1914-1996) who was also a Nobel laureate. Vickrey’s paper, Counterspeculation, auctions and competitive sealed tenders, was the first of its kind using the tools of game theory to explain the dynamics of auctions. Any one that truly understand the magic of a reverse auction understands that the same type of psychology that drives gaming in a Casino drives the dynamics of a reverse auction.
There are a number of types of reverse auctions which is why a strategy is important when you look at each category that you decide to take to market. Specifically to the opening question, a Vickrey auction allows for selling single items where the lowest bidder sells the item at the price offered by the second lowest bidder.
Think about how you might implement this strategy to encourage bidder. How would you set your system indicators? Might you use ranking or a reserve or low quote indicator? If so, what impact might it have? Shouldn’t you be asking that question up front as you set your strategy?
See, there is much to ponder, and much you can do. If you like to learn more about how certain tools and features may influence bidding behavior, please contact a SafeSourcing Customer Services representative.
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