Auctions - How To Succeed 5

The English Auction

Candle Auction

Auction by candle was popular from around 1490 through to about 1893. In fact, it is still used on occasions even today, but kept limited to only ceremonial purposes. From 1674, the Candle auction began to lose its popularity and was eventually replaced by the English auction. Both of these forms of auction are classified as open auctions in which participants may bid as often as they like and are fully aware of each other's previous bids.

The procedure for the Candle auction would involve the auctioneer lighting a one-inch tallow candle, which was prominently situated on top on his desk, and accepting bids only for as long as the candle was burning (which was normally 15 to 20 minutes). By contrast, an English auction would be conducted somewhere between 20 seconds and 10 minutes.

In the diary of Samuel Pepys (1633-1703), he makes reference to two separate instances in London, in Nov 1660 and Sept 1662, when his employer, who was the Admiralty, would sell ships that were no longer required “by an inch of candle”. He also alludes to a hint he received from a very successful bidder who had noted that, moments before expiring, a candle-wick would always flare up slightly. This was his signal, and when observing the display, he would shout his final - and winning - bid.

The uncertainty of predicting the precise moment when no more bids will be accepted is used as the basis of a method currently used on the Internet. It is, in essence, a candle auction without the candle, but with a computer randomly selecting the precise moment when the auction will end. The principle inherent in this method is to prevent bidders from holding back until the very last moment before submitting their final bids. In contrast, the bids will be spread out and, in this way, submitted somewhat earlier. The result of this is that the additional bids may then act to increase the final bid. Accordingly, the final bid is likely to reach a higher level than it would without the computerised intervention. The entire process is computerised and the auction itself is conducted on-line and without the presence of an auctioneer.

Auction sniping is a recent innovation which involves watching a timed online auction, such as on eBay, and submitting a winning bid at the last possible moment, which may in fact be only seconds before the actual end of the auction. In this way, the other bidders have little if any time to outbid the sniper. Some bidders do this manually whilst others employ the use of software specifically designed for the purpose. A bid sniper is an individual or software agent who submits his bids by way of auction sniping. The sniping tactic invariably leaves other bidders with too little time to determine how much to bid since the snipers highest bid is not made available for others to see. As a result, the sniper usually wins.

Another variant is the availability of online sniping services in which the software agent (which is a piece of software that acts on behalf of the user in a relationship comparable to a normal agency) operates from a website rather than the snipers own computer. This process reduces the failure rate of the snipe since the agency website is likely to operate servers that would be expected to react much quicker.

Auctions – How To Succeed