Lessons Learned

• Auctions are useful for sellers because they automatically adjust the price based upon buyer interest.

• Auctions are most advantageous to those selling time-limited goods or services.

• In first price sealed-bid auctions, you should always bid less than what the good is worth to you.

• In honest second price sealed-bid auctions, if you know exactly how much the good is worth to you, then you should bid this amount.

• If you are not sure of the good’s value, you should beware of the winner’s curse, which holds that the winning buyer is often the buyer who most overvalued the good.

• Auctions can be used to allocate tasks among employees.