A Second Item Auction
A second item auction can be confused with a Dutch auction or a second price auction, especially in finance. In a second item auction, the seller offers more than one identical items for sale, so that there may be more than one winning bidder. Each bidder can bid for all the items or only some of them, and publicly indicates the price that he/she is willing to pay for each item. However, all winning bidders need to pay only the lowest qualifying (successful) bid. If there are more successful bids than items available, priority goes to the bidders who submitted their bids first.
In order to beat a competing bidder, one must bid a higher price per item than that competitor, regardless of the number of items that are being bid for. Here is an example of how this might work:
The seller auctions 5 identical items.
- Bidder "A" bids for 2 items at $20 each.
- Bidder "B" bids for 4 items at $21 each.
- Bidder "C" bids for 3 items at $18 each.
The outcome of this auction would be:
- Bidder "B" wins 4 items at $20 each....
- Bidder "A" wins 1 item at $20 each.
The price is $20 because that was the lowest successful bid (hence the second price). Since Bidder "A" was only awarded 1 item, and his original bid was for 2 items, he has the right to refuse the purchase of that partial amount. As a winning bidder, you have the right to refuse paying if you are only awarded less than the number of the items you were bidding on.
Read more about this topic: Dutch Auction
Famous quotes containing the words item and/or auction:
“The best way to teach a child restraint and generosity is to be a model of those qualities yourself. If your child sees that you want a particular item but refrain from buying it, either because it isn’t practical or because you can’t afford it, he will begin to understand restraint. Likewise, if you donate books or clothing to charity, take him with you to distribute the items to teach him about generosity.”
—Lawrence Balter (20th century)
“The white American man makes the white American woman maybe not superfluous but just a little kind of decoration. Not really important to turning around the wheels of the state. Well the black American woman has never been able to feel that way. No black American man at any time in our history in the United States has been able to feel that he didn’t need that black woman right against him, shoulder to shoulder—in that cotton field, on the auction block, in the ghetto, wherever.”
—Maya Angelou (b. 1928)