What is online auction?

Produce auctions, in which produce growers have a link to localized wholesale buyers (buyers who are interested in acquiring large quantities of locally grown produce).[60]

Katehakis and Puranam provided the first model[62] for the problem of optimal bidding for a firm that in each period procures

items to meet a random demand by participating in a finite sequence of auctions. In this model an item valuation derives from

the sale of the acquired items via their demand distribution, sale price, acquisition cost, salvage value and lost sales. They

established monotonicity properties for the value function and the optimal dynamic bid policy. They also provided a model[63]

for the case in which the buyer must acquire a fixed number of items either at a fixed buy-it-now price in the open market or by

participating in a sequence of auctions. The objective of the buyer is to minimize his expected total cost for acquiring the fixed

number of items.

Bid shading is placing a bid which is below the bidder's actual value for the item. Such a strategy risks losing the auction, but

has the possibility of winning at a low price. Bid shading can also be a strategy to avoid the Winner's curse.

This is the practice, especially by high-end art auctioneers,[64] of raising false bids at crucial times in the bidding in order to

create the appearance of greater demand or to extend bidding momentum for a work on offer. To call out these nonexistent

bids auctioneers might fix their gaze at a point in the auction room that is difficult for the audience to pin down.[65] The practice

is frowned upon in the industry.[65] In the United States, chandelier bidding is not illegal. In fact, an auctioneer may bid up the

price of an item to the reserve price, which is an unstated amount the consignor will not sell the item for. However, the auction

house is required to disclose this information.

In the United Kingdom this practice is legal on property auctions up to but not including the reserve price, and is also known as

off-the-wall bidding.[66]

Whenever bidders at an auction are aware of the identity of the other bidders there is a risk that they will form a "ring" or "pool" and thus manipulate the auction result, a

practice known as collusion. By agreeing to bid only against outsiders, never against members of the "ring", competition becomes weaker, which may dramatically

affect the final price level. After the end of the official auction an unofficial auction may take place among the "ring" members. The difference in price between the two

auctions could then be split among the members. This form of a ring was used as a central plot device in the opening episode of the 1979 British television series The

House of Caradus, 'For Love or Money', uncovered by Helena Caradus on her return from Paris.

A ring can also be used to increase the price of an auction lot, in which the owner of the object being auctioned may increase competition by taking part in the bidding

him or herself, but drop out of the bidding just before the final bid. In Britain and many other countries, rings and other forms of bidding on one's own object are illegal