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A bid price is the highest price that a buyer (i.e., bidder) is willing to pay for some goods. It is usually referred to simply as the "bid". In bid and ask, the bid price stands in contrast to the ask price or "offer", and the difference between the two is called the bid–ask spread. An unsolicited bid or purchase offer is when a person or ...
The auctioneer does not disclose the current maximum bid, but the second highest bid is always public. In proxy bidding, the wise bidder must know in advance the "true" value of an item as a basis for their secret bidding limit. [2] The fact that the maximum bid is revealed when it is outbid introduces the possibility of maximum bid fishing.
In auctions, the buyer's premium is a charge in addition to the hammer price (i.e. the winning bid announced) of an auction item, or lot. The winning bidder is required to pay both the hammer price and the percentage of that price called for by the buyer's premium.
For example, if a stock price has a bid price of $100 and an ask price of $100.05, the bid-ask spread would be $0.05. The spread can also be expressed as a percentage of the ask price, which in ...
Bidding fee auction, a variation of all-pay auction, also known as a penny auction, often requires that each participant must pay a fixed price to place each bid, typically one penny (hence the name) higher than the current bid. When an auction's time period expires, the highest bidder wins the item and must pay a final bid price. [66]
An automated bidding service will bid on his behalf to ensure that he meets the reserve price, or that he always stays in the lead, up to his maximum bid. If someone else has placed a bid that is higher than the maximum bid, the will be notified, allowing he to change the maximum bid and stay in the auction.
In the basic model of optimal auction design developed by Roger Myerson (1981), the optimal reservation price (i.e., the smallest admissible bid) is independent of the number of bidders. [8] This basic model of optimal auction design assumes that the bidder's type is known; that is, the seller has asked the potential buyers what their value ...
In a first-price auction, the auctioneer receives the maximum of the two equilibrium bids, which is (/, /). In a second-price auction, the auctioneer receives the minimum of the two truthful bids, which is (,). In both cases, the auctioneer's expected revenue is 1/3.