Auction Theory, 2nd Edition

4 Introduction

1.3 EQUIVALENT AUCTIONS

Four auction formats have been outlined here. Two were open auctions—

the English and the Dutch—and two were sealed-bid auctions—the first- and

second-price formats. These seem very different institutions, and certainly, they

differ in the way that they are implemented in the real world. Open auctions

require that the bidders collect in the same place, whereas sealed bids may be

submitted by mail, so a bidder may observe the behavior of other bidders in one

format and not in another. For rational decision makers, however, some of these

differences are superficial.

First, observe that the Dutch open descending price ...