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An auction is usually a process of buying and selling goods or services by offering them up for bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder.

The branch of economic theory dealing with auction types and participants' behavior in auctions is called auction theory. The open ascending price auction is arguably the most common form of auction and has been used throughout history.

In a candle auction, the end of the auction was signaled by the expiration of a candle flame, which was intended to ensure that no one could know exactly when the auction would end and make a last-second bid.

A reverse price auction is not necessarily 'descending-price' — the reverse Dutch auction is an ascending-price auction because forward Dutch auctions are descending.

First-price sealed-bid auction, or a sealed-bid first-price auction/blind auction, is a type of auction where all bidders simultaneously submit sealed bids so that no bidder knows the bid of any other participant. This type of auction is distinct from the English auction, in that bidders can only submit one bid each.

Another special case of a combinatorial auction is the combinatorial clock auction (CCA), which combines a clock auction, during which bidders may provide their confirmations in response to the rising prices, with a subsequantial sealed bid auction, in which bidders submit sealed package bids.

A No-reserve auction (NR), also known as an absolute auction, is an auction in which the item for sale will be sold regardless of price. A reserve auction is an auction where the item for sale may not be sold if the final bid is not high enough to satisfy the seller; that is, the seller reserves the right to accept or reject the highest bid.

Bidding fee auction, a variation of all-pay auction, also known as a penny auction, often requires that each participant must pay a fixed price to place each bid, typically one penny (hence the name) higher than the current bid.

A Yankee auction is a single-attribute multiunit auction running like a Dutch auction, where the bids are the portions of a total amount of identical units.

In an English auction, all current bids are visible to all bidders and in a sealed-bid auction, bidders only get to know if their bid was the best.

A buyout auction is an auction with an additional set price (the 'buyout' price) that any bidder can accept at any time during the auction, thereby immediately ending the auction and winning the item.

Multiunit auction, Combinatorial auction, Generalized first-price auction and Generalized second-price auction are multi-winner auctions.

For instance, an Amsterdam auction is a type of premium auction which begins as an English auction. A French auction is a preliminary sealed-bid auction before the actual auction, whose reserve price it determines.

In a first-price auction, a dummy bid is an unfavourable bid designed so as not to become the winning bid. (The bidder does not want to win this auction, but they want to make sure to be invited to the next auction).

Auction house – the company operating the auction (i.e., establishing the date and time of the auction, the auction rules, determining which items are to be included in the auction, registering bidders, taking payments, and delivering the goods to the winning bidders). Auctioneers may or may not (depending on the laws of the jurisdiction and the policies of the auction house) bid for their own account, or if they do, must disclose this to bidders at the auction; similar rules may apply for employees of the auctioneer or the auction house. No reserve auction (a/k/a "absolute auction") – an auction in which there is no minimum acceptable price; so long as the winning bid is at least the minimum bid, the seller must honor the sale.

Quick Facts

• Auction house – the company operating the auction (i.e., establishing the date and time of the auction, the auction rules, determining which items are to be included in the auction, registering bidders, taking payments, and delivering the goods to the winning bidders).
• A buyout auction is an auction with an additional set price (the 'buyout' price) that any bidder can accept at any time during the auction, thereby immediately ending the auction and winning the item.
• First-price sealed-bid auction, or a sealed-bid first-price auction/blind auction, is a type of auction where all bidders simultaneously submit sealed bids so that no bidder knows the bid of any other participant.
• Multiunit auction, Combinatorial auction, Generalized first-price auction and Generalized second-price auction are multi-winner auctions.
• The open ascending price auction is arguably the most common form of auction and has been used throughout history.

Source material: Wikipedia - "Auction". Adapted and summarized for DiscoverScroll. Original contributors are credited through the linked Wikipedia article. Read original on Wikipedia. CC BY-SA 4.0. Changes were made from the original.