Macroeconomics and Microeconomics - Auction Theory Essay

Macroeconomics and Microeconomics - Auction Theory - Essay Example The first type of open auctions is called English or ascending bid auctions, where the auction is usually done in real time. In this case, the seller usually sets a low price as the beginning price, after which the price is increased gradually as the bidder offer their prices. The bidders drop out of the auction as their true values are exceeded until the last bidder gets the item at her intrinsic value. The second type of auction is called Dutch or descending bid auctions, where the seller starts the auction at a high price and then gradually drops until the first bidder states the price and takes the item at the stated price (Easley and KleinBerg, 2010). The main area of focus for this paper is sealed bid auctions, which are divided into two types; first-price sealed bid auctions and second-price sealed bid auctions. The first-price sealed bid auction is one where all the buyers submit simultaneous sealed bids to the seller, who opens them and sells the item to the highest bidder a t the stated price (Easley and KleinBerg, 2010). Conversely, second-price sealed bid auctions refer to a case where the buyers submit sealed bids to the seller, who opens them and sells the item to the highest bidder, but at the second highest price. This type of auction is also called Vickrey auctions (Koutsojannis and Sirmakessis, 2009). Informational asymmetry in auctions usually affects the bidding decisions of both the seller and the buyer (Koutsojannis and Sirmakessis, 2009). To describe seller monopoly, consider an auction where the seller attaches a price of x on the item, and the bidder attaches a price of y to the item. In this case, the surplus to the seller and the buyer is...This essay outlines key concepts of the auction theory and stresses the importance of the game theory advances in choosing the right bidding strategy. This paper mainly focuses on first-price and second-price sealed auctions. The types of auctions are usually dispersed between open and sealed auctions, both of which need different types of bidding strategies . The first type of open auctions is called English or ascending bid auctions, where the auction is usually done in real time. The second type of auction is called Dutch or descending bid auctions, where the seller starts the auction at a high price and then gradually drops until the first bidder states the price and takes the item at the stated price The first comparison is between descending bid auctions and first-price auctions, where we know that, in a descending bid auction, the seller lowers the price until the first bidder gets the item at the highest price. Conversely, second-price sealed bid auctions and ascending bid auctions are similar. In the case of first-price sealed bid auctions, the value of the bid affects both the winning fact and how much the winning bidder pays for the item. The game theory setting for this kind of bid is to set up the bidders as players, where a bidder i assigns a value v to the item and bids at a price b. The dominant strategy in the case of second-price sealed bids is a truthful strategy, where the bidder bids the price of her true value as assigned to the item, since deviations from the price does not increase the payoff earned

The Global Marketplace Essay Example | Topics and Well Written Essays - 750 words

The Global Marketplace - Essay Example They always put people before the product and this has ensured success for them locally as well as internationally. Even with suppliers they have a healthy relationship, this allows them to get quality coffee beans thus good coffee. They are also involved in corporate social responsibilities services like helping the farmers and protecting the environment by buying only from those suppliers who are socially responsible themselves. Looking at the price we see it high priced thus the target market is elite in Germany. 1 lb. of coffee costs approximately $11. Thus the rich Germans prefer to go there and since the coffee is made to their taste (altered according to German preferences that is they prefer more sweet coffee) the coffee is an instant hit. The decor of Starbucks is made to look cozy and intimate and also provides privacy to people, this gives people an incentive to spend time there. They have good music and thus create an ambiance of comfort. It can serve the purpose of a meeting place or a place to escape from problems and be alone. This feature remains to be constant in all outlets all over the world. The article, 'Ethical marketing for Competitive Advantage on the internet' deals with the very debatable question, what is invasion of privacy Its author Ashok Ranchod has weaved quiet interesting facts around this very question. It seems to him that the marketing done online is taking on an aggressive streak with pop ups, deceiving banners, hyperlinks etc being the majority of marketing techniques. The article takes a futuristic approach, with the author pointing out the fact that companies need to develop long term marketing plans, which would retain customers rather than short term plans. The short term plans might sell the product or service initially but in the end if ethical considerations have not been taken place then the company would end up losing their customer base. Therefore in order to survive in the market the future plans of a company should be more of long term nature. The situation that Ashok Ranchod looks upon is that of information acquiring on the Internet. According to his research many people hesitate from indulging in online purchases due to this factor. Cyber crimes, information thefts are becoming all too common these days. There have been many ethical boundaries drawn but only 20% of it is being implemented. The steps that can be taken to rectify this ethical concern is that each product be first analyzed on its harmfulness to the customers. The product should be well tested and should be harm free. Twisting the truth is another factor, with regards to which care should be taken. Then the third most important factor is individual autonomy. This is that companies should not attack customers with pop ups and deceptive links, instead the decision should be left on the customer. Kotler and Levy have written an interesting book, 'Corporate Social Responsibility'. Even they believe that through ethical considerations you can enhance company image, lower employee turnover, lower costs and easily attract investors thus giving you a competitive edge. REFERENCES 1. Starbucks official website. (22/july/2008) http://www.starbucks.com/ 2. Starbucks Germany (22/july/2008) http://www.starbucks.de/de-de/_Our+Stores/ 3. Ashok Ranchhod and Claire Gauzente. "Ethical Marketing for Competitive Advantage on the Internet." Ams Review. (2003)