Dutch auctions
In Amsterdam, the flowers are perishable ....
Monday, February 21, 2011
Gay Crusin Spots In Edison Nj
And so, singing flowers and perishable Amsterdam, Jacques Brel had sensed a major financial development? Holland is indeed the main flower market in the world. Each year, over 10 billion cut stems were sold through these cooperatives Batavian. These flowers are from distant countries (Kenya, Israel, etc..) And are mostly exported the day same. The Netherlands have specialized in this market is not just anecdotal: the West European average annual expenditure per year per capita hovers around 30 euros, with growth markets such as Russia and Poland . The varieties of flowers are also changing: orchids and callas are now required in some freesias, roses, tulips, carnations and chrysanthemums other. But there is another singularity at the flower markets, many investment bankers inspired without knowing its origin: the Dutch auction (in English, "Dutch auctions "). This system was invented in 1870 to meet the peculiarities of trading since the last flowers fade to lose market value. This methodology, common to many halls of fruits, vegetables and cheeses, reflecting the ephemeral nature of the product. These Dutch auctions are inverted or downward. This protocol requires a word of explanation. In a conventional auction system, described as "rising" or English, an initial bet is set by a seller. Each buyer offers a sum greater than the previous one, it becoming the new registered amount. The auction ends when no buyer wants to increase its proposal and is then awarded to the last official bidder. The dominant strategy of the buyer is therefore to provide a sum as small as possible (but higher than that) until the bidding reaches the maximum value it can offer. The English auction can themselves be broken in different ways of bidding. In the Dutch auction system or reversed, that is exactly the opposite happens. The seller decides on a maximum price higher than the amounts that can offer buyers. The price subsequently declined gradually, by increments until it reaches an amount acceptable to one buyer who then wins the auction. Dutch floriculture market, a dial (now replaced by an electronic clock) share price higher and lowered by increments of one hundred euro until a buyer appears and wins the lot flowers. Except in cases of excess supply, there is little risk that a lot remains unsold, even at a low price. Like any auction, a Dutch auction requires the buyer to set the price maximum to which he is willing to acquire, but its degree of freedom is reduced, losing the right to acquire through a price increase. By cons, there is no risk of being dragged into a price increase
The Dutch auction system is not confined to the horticultural world. The Internet site "eBay" in, for example, developed a variant. These auctions are also needed in the financial sector, and especially when the IPO. Google is the company that has innovated in this area in 2004. The principle of the auction of Google stock that investors demanded potential make binding offers for a given number of shares and a fixed price. Then the best deals were selected "down" depending on the amount of shares available. The price paid was the price mentioned by the investor during the auction period, not a weighted average of different offers
That said, auctions are a complex mathematical theory that is the games, because it is optimize the efficiency of the allocation. Various researchers have studied this matter: John Nash, Nobel Prize 1994 and immortalized by the movie " A Beautiful Mind ", but also William Vickrey, Nobel Prize 1996. In interesting system Vickrey (or second-price auction), no buyer has informed the development of other protagonists. It is the buyer who offers the highest sum wins the auction, but at the cost of the second set, that is to say that lying just below the winning bid. The lot is up to the highest bidder, but it pays only the price given by the second highest bidder. This system forces the buyer to provide a superior proposal or that it is able to offer (at the risk of being unable to pay the sum of the second bid) or a proposal to lower the risk of being lost the auction he had the chance to win. This system was used to assign the telephone licenses in the United Kingdom.
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