My wife and I occasionally go to auctions. I don’t mean the Sotheby’s type of auction, I mean estate type auctions, where an auctioneer sells off someone’s personal property to the highest bidder. This got me wondering two things:
Where did the concept of auctioning off goods come from? Is that relatively recent? I used to think that auctions were an American tradition, but somehow I doubt that. How about the stereotypical fast-talking auctioneer? How long has he been around?
How common are auctions in other countries? What are they used for? Here in the US, most of the auctions I’m familiar with are either estate/personal property auctions, where someone hires an auctioneer to sell unwanted goods, or antique/consignment auctions, where dealers sell their stock at regularly-held auctions. Is this pretty much the same elsewhere? Anecdotally, I’ve been told that, in Korea, auctions are used in wholesale produce markets.
1 - Auctions are ancient. We know the Hebrews and the romans used the auction method of sale. Chances are it’s as old as commerce. The fast-talking auctioneer (it’s called his “chant”) has been around just as long, I’m sure.
Since auctions originated in other countries, it stands to reason they’re pretty common. As a matter of fact, the two main types of auctions used in the US were both borrowed from other countries: the English Auction & the Dutch Auction. Estate sales are typically English, where the bid is ascending. Dutch auctions work the opposite way and I believe were primarily used to sell large volumes of tulips and other flowers to resellers.
I believe America got started in the auction industry by selling slaves on the block. Nowadays, real estate is the new commodity raking in the big money at auction.
Dutch auctions are used pretty frequently in the securities industry (and occasionally on eBay.) This type of auction seems to be most common when there is a large volume of fungible (interchangeable) items, like stock shares or bonds or when someone has 20 of the same item to sell on eBay.
Thanks for the info; although I’ve heard of “Dutch auctions,” I’ve never heard of estate-type-auctions refered to as “English auctions.” I learned something!
And, Chief, if you’re gonna give a citation, for God’s sake give a bibliographic entry. I can’t tell if you’re quoting from The International Journal of Ooga Oog Uhh Uggauggaugga, The Daily Uuuuh, or some obscure local papyrus.
There are more types of auction than Chief Scott can poke a stick at.
As well as Dutch and English there are sealed bid auctions, double auctions and second price auctions, where the highest bid wins, but you have to pay the second highest bid. The second price auction avoids what is known as the winner’s curse: if you are prepared to pay the most for an object with unknown value (say a television broadcasting licence) then chances are you have overvalued it. Knowing this, prudent bidders bid a little less than what they think it’s worth… and lose.
If you think about auctions, they are an institutionalised version of haggling, with multiple players. Given that fixed price markets are relatively new phenomena but people have always traded, auctions - or something like them - have been around since people.