Analyzing Auctions and Dynamic Pricing

Case Study: Auctions and Dynamics Pricing
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Case Study: Auctions and Dynamics Pricing
Question One
English and Dutch Auctions
           An English auction is a type of auction where the bid starts low, and the prices increase as more buyers bid until the highest bid/price is reached (Numberphile, 1). The English auction is also called the oral ascending auction because of how the prices rise. The value of the commodity is discovered when the highest price is quoted, and no buyer is willing to bid higher than the quoted price. A Dutch auction is a type of auction where the bid starts high, and the subsequent bids decrease in price until the bid reaches the least amount that a buyer is willing to pay (Numberphile, 1). In both the English and Dutch auctions, participants/bidders bid openly for the item(s) against each other (Malekovic, Goutas, Sutanto, & Galletta, 2). Also, the winner of the bid in both auctions pays the exact amount they bid for, that is, the first price.
           However, other than the fact that the Dutch auctions start high and the English auction starts low, another difference lies in the flow of information to the bidders. According to Malekovic, Goutas, Sutanto, and Galletta (2), participants in the Dutch auction face more uncertainty than their counterparts in the English auction because, in the Duct auction, bidders cannot see the bids from other bidders until the final bid that closes the auction is quoted. The bidders in English auctions can see the bids of other bidders and have more information. Also, emotions and emotional responses in the English and Dutch auctions are different. Emotions have a higher impact on price in a Dutch auction than in an English auction (Deck & Wilson, 3). The emotional processing in a Dutch auction is higher than in an English auction (Malekovic, Goutas, Sutanto, & Galletta, 2). Bidders bid a bit higher in the Dutch auction because of the excitement (Numberphile, 1).
Sealed-bid First-price Auctions and Vickrey Auctions
           A sealed-bid first-price auction is a type of auction where the bidders seal their bids in an envelope and submit them at the same time (Numberphile, 1). The bidder who quotes the highest price wins the item. On the other hand, a Vickrey auction is a type of sealed-bid auction where bidders submit their bids in a sealed envelope at the same time, but instead of the highest bidder paying the first price/highest bid, they pay the second-highest bid/price (Numberphile, 1). This is why it is also called the second-price sealed bid auction. In both types of auction, bidders submit their sealed bids simultaneously in a sealed envelope. In addition, the flow of information is also limited in both auctions because the bidders are not aware of what other participants have bid on the item. 
           However, in a sealed-bid first-price auction, as the name suggests, the price paid by the winner is equal to the highest bid. (Deck & Wilson, 3). Thus, the winner pays the exact amount they bid on. But in a Vickrey auction, the price paid by the winner i...