Talk:Dutch auction
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All talk related content must remain at the talk level. Some IDIOT posted this on the main page and I have removed it: The claim that a Dutch auction is a form of first degree price discrimination is nonsense submitted by an amateur. More specifically, it does not constitute a Nash equilibrium. It is clear to see that the above strategy guarantees zero profits to the bidder who employs it. Why not use a strategy that will give you positive profits, even if you don't win as often? I suggest you read Auction Theory by Vijay Krishna. If it is reworded it may be acceptable posted back.Kendirangu 10:03, 19 December 2006 (UTC)
I've learned in an auction theory class that the strategy here should be the same one as applied in a Vickrey auction (each bidder bids his/her value), not first-price sealed (each bidder will bid N/(N-1) * his/her value, where N is the number of participants in the auction). Can anyone confirm that the page is incorrect when it says the strategy of a dutch auction is the same as the strategy of a first-price sealed bid auction?
- Sorry, but that is incorrect. There are equivalences in optimal symmetric bidding strategies between the Dutch and the first-price sealed-bid auction on the one hand and the Vickrey and the English auction on the other hand. Bidding one's private value in a Dutch auction has an expected profit of 0, the expected profit of bidding slightly less is positive so bidding the private value cannot be a best-response. RoyalTS 18:43, 9 January 2007 (UTC)
I can clarify the above: optimal strategy in Vickrey is to bid your value. Optimal strategy in both first-price sealed-bid and in Dutch (IF the values are drawn from a common-knowledge U[0,1] distribution -- an enormous "if") is to bid (N-1)/N times your value where N is the total number of bidders. --Daniel Reeves (PegArmPaul) —Preceding unsigned comment added by PegArmPaul (talk • contribs) 17:13, 23 May 2008 (UTC)
[edit] Dutch auction in Dutch
The article says:
- (...) in the Netherlands this type of auction is actually known as a "Chinese auction". Another Dutch word for it is: "afmijnen" literally "Mining off" because the actual bid is often called out by the buyer, who says: "Mine!"
I never heard anyone in the Netherlands refer to a Dutch auction as a Chinese auction or as afmijnen. We call it veiling or veiling bij afslag. If it is known as afmijnen (which it might be; I'm not at all well versed in auction terminology), I very much doubt it originated in using the word mijn (mine) when calling the bid. Can someone verify either of these points? If not, I suggest they are removed. ··· rWd · Talk ··· 12:26, 21 February 2007 (UTC)
- In Ralph Cassady, Jr.'s Auctions and Auctioneering (1967) Cassady indicates that buyers bid by shouting "Mine!" to stop the price and claim all or part of the lot for sale; however, Cassady does not connect this term to "Mining off." MP (talk) 08:18, 21 December 2007 (UTC)
[edit] T-Bill Dutch-Auctions
From the example given in this part of the article text, it would appear that the discount rate is actually the average of the blind or sealed bids, each based on a major commercial bank's own portfolio rate-of-return requirements. This suggests the irrationalist or market quality of the process and alludes to a degree of watering of the currency. The economist, Joseph Budish, had mentioned this in an older article.Castilloactualidada 07:29, 18 August 2007 (UTC)
[edit] Does 'Dutch' always descend?
A Dutch auction with buyers competing for an item (or lot) descends, but a Dutch auction with sellers competing for a fixed demand would increase: the defining characteristic for Dutch is that the price moves favorable for the bidders (decreasing for buyers; increasing for sellers); the reverse is true for an English auction (the price would increase for buyers and decrease for sellers). For references on Dutch and English designs for buyers and sellers see:
1. Designing Call Auction Institutions: Is Double Dutch The Best? Kevin A. McCabe. Stephen J. Rassenti. Vernon L. Smith. The Economic Journal
2. Auction Institutional Design: Theory and Behavior of Simultaneous Multiple-Unit Generalizations of the Dutch and English Auctions KA McCabe, SJ Rassenti, VL Smith - The American Economic Review, 1990
