An auction is a procedure wherein multiple parties pledge to pay certain amounts of money for an item. The item is sold to the person who offers the most money.
Auctions can be open (meaning that bidders can see other people's bids), or sealed (meaning that bidders cannot see other people’s bids).
Auctions can be dated back to 500 B.C. in Babylonian where women were sold for the purpose of marriage. Some reports state that monetary compensation was provided to those men who won less attractive women.
Auctions have also been recorded in the Roman Empire and were used to liquidate property and estate goods. There is also evidence that Buddhist Monks in China used auctions to raise funds for building temples and it was customary to auction off property of deceased monks to raise money in this way.
One of the most astounding auctions in history occurred in 193 A.D. when the whole Roman Empire was put up for auction by the Praetorian Guard. The Emperor, Pertinax, was killed and it was then announced that the highest bidder could claim the Empire. The winning bid came from Didius Julius who bid 6,250 drachmas per Guard. Julius was beheaded two months after this and later, the Empire was restored to the people.
During the 15th century formal auction laws and auction licenses were instated by King Henry VII of England.
The earliest modern era records of auctions appeared in the Oxford English Dictionary in 1595. Post-1595 reports of art auctions regularly appeared in the London Gazette.
During the 17th century auctions were held in taverns and coffee houses to sell art and other items. In 1739, announcements were published in the London Evening Post for sales of land.
Two of the world’s leading auction houses were established during the 18th century.
Sotheby’s was founded in 1744 by Samuel Baker and had its first sale on March 11th of that year.
Christie’s was established in 1766 by James Christie who held his first sale on December 5th that year. The sale consisted of two chamber pots, a pair of sheets, two pillowcases and four irons.
Following the colonisation of America, many items such as furs, tobacco and corn were regularly sold using the auction format. Soon, auctions were being used to sell land, crops, animals and slaves.
Real estate auctions became popular during the 1900s.
By the 1990s, auctioneers were starting to utilise technology to improve their auction format. Some auction houses began using large screens to project images of the lots.
The online auction platform, eBay, was launched in 2005, meaning that people could bid on items they wanted from the comfort of their own homes. The first item to sell on eBay was a broken laser pointer which sold for $14.83 to a collector.
Main article: List of auction terms
Types of auction
There are many different types of auctions which can occur both in person and on the internet.
Normal/standard/English – the most common form of auction where the bidder who pledges to pay the most money wins the item. A reserve price may be set whereby the vendor may keep the item if the reserve price is not met.
Dutch/multiple – auction of multiple identical items. Bidders can choose the quantity of items they wish to purchase.
Turbo – like a normal auction but with low starting prices and no reserve prices.
Blind/sealed/silent – Bids are kept hidden until the end of the auction.
Barter – bidders offer a combination of goods/service and/or cash for the item which is being offered. The seller is then able to accept whichever bid they wish.
RFQ (Request for Quotation) – the bidder is able to enter details regarding their offer. The seller may then choose the most suitable offer.
MaxPrice – the number of bids that can be placed on a lot is limited and the highest unique valued bid wins the item. Similar to the lottery format.
Private – Bidders’ identities are revealed only to the seller and no one else.
Quick Win/Threshold – same as a normal auction except the auction ends when a preset threshold bid price is reached.
Auto Mark Down – a fixed price auction of multiple items where the offer price automatically drops at regular intervals. For example, during a 10 day auction, the price would drop by 10% every day.
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