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auction arbitration

 Save time and stress by short-circuiting unwanted auctions
 
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Sometimes you take part in an auction because you genuinely want to: for the excitement, or the social buzz, or whatever. But sometimes an auction arises simply because there are two or more people wanting a single thing. It's commonplace with house purchases, for instance.

No one likes that sort of auction. If you get involved in one, it's because you have no choice. As far as all the buyers are concerned, all they want to do is to buy whatever it is as cheaply as possible, or to know that someone else was willing to pay more than them.

In other words, instead of actually making the buyers bid it would suffice for them all to tell a trusted third party the absolute maximum they're willing to pay; then the highest bidder would get whatever-it-was for the second highest offered price, plus some specified minimum increment. No more psychological warfare.

The third party could be a real person (I can imagine a thriving industry of Auction Arbitrators, if I try really hard), or a computer using some cryptographic protocol.

—g, Mar 21 2001

Vickrey auction http://www.agorics....tions/auction5.html
What g's kind of auction is usually called. It is a relatively recent invention and has some very nice properties. [jutta, Mar 21 2001]

[link]






       Baked to charcoal. This is called a 'Sealed Bid' auction.   

       Only difference is you get it at your bid, not at the second highest.
—StarChaser, Mar 21 2001
   

       What StarChaser said, but some variants do give it to you at the second highest price. (Thanks, Jutta.)   

       eBay, the mother of all online auctions, uses "proxy bidding" to achieve the same end result.
—egnor, Mar 21 2001, last modified Mar 22 2001
   

       ...or f bidding altogether and use the "Buy it Now" option.
—iuvare, Mar 22 2001
   

       Uncreatively, Egnor's class of auction is called a "Second Price auction"; creatively, a "Vickrey" auction, after William S. Vickrey, the nobel-prize winning economist; see link.
—jutta, Mar 22 2001
   
      
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