The Whisper Auction
In this time-consuming auction format, potential buyers whisper their bids into the auctioneer’s ear without knowing what their competitors are bidding. This auction format is used in some international fish markets (for example, Venice and Singapore). The auctioneer can choose to ignore certain bidders (e.g., bidders known to be shills or bad credit risks) in both the whisper and handshake auction formats.
However, similar to the handshake method, there is the possibility of auctioneer collusion. Time Interval Auctions
A time-interval auction is similar to an English (open ascending bid) auction in format, except that all bidding must be completed within a set timeframe. This auction format is commonly used in the real-estate and manuscript markets, where auctions can last days or weeks. Historically, time interval auction formats used sand through an hour glass or a burning candle to measure the allotted bidding time. 2016 All Star Training, Inc. Page 22 Even in the early twentieth century, property auctions used the burning candle method. A group of bidders would gather out of the wind, cut a candle to about one inch in length, and light it. As the candle burned, bids would be called out in ascending order, with the winner determined to be the highest bidder when the candle burned out. Candle-lit auctions featured a variety of strategies, including early high bids to deter competition, waiting until the last seconds to offer a high bid, and bidding actively throughout the auction.
One issue with this format is that it is difficult to determine the winner if all bidders use the strategy of bidding at the last possible moment.
The Audible-Bid Rotation Auction
An audible bid rotation auction is a variation on the sealed handshake auction in which open bids alternate in a predetermined pattern. Similar to an English auction, bids ascend; the auctioneer announces the current high bid (for example, by writing it on a blackboard), and each bidder, in turn, either raises or passes. The auction is won by the bidder who maintains the highest bid after all other bidders have passed their turn to bid.
The Handshake Auction
The handshake auction is one of the oldest recorded auction formats, having originated in China and being used until the late 1950s. A group of bidders encircles the auctioneer and takes turns clasping the auctioneer’s hand in this time-consuming format. A cloth conceals the hands of the bidder and auctioneer, allowing only the bidder and auctioneer to know the true bid amount. A potential buyer indicates a bid by pressing a number of the auctioneer’s fingers together and then announcing aloud the monetary unit to which the squeeze refers. A bid of thirty can be indicated by squeezing three fingers at the same time, or by squeezing one finger three times in succession while announcing the monetary unit of ten. After each bidder takes one turn, the auctioneer must remember each bid and announce the winner.
In a handshake auction, there are numerous opportunities for manipulation and deception. For example, if the final sale price is kept secret, the auctioneer may be guilty of collusion with a bidder or group of bidders. Bidders can also mislead competitors. For example, a bidder could grasp the auctioneer’s four fingers while announcing a small unit (e.g., ten), making his or her bid appear smaller than it is. By grasping only one finger while announcing a large monetary unit, a bidder may mislead competitors into believing he or she is making a large bid. A shill may try to raise the bids by taking an All Star Training, Inc. 2016 All Star Training, Inc. Page 21 auctioneer’s hand, making a bid, and then canceling it by scratching the auctioneer’s palm while announcing some large monetary unit.