Dutch Auctions

Dutch auctions can be a little complicated, but they actually make a lot of sense once you understand them. In a normal auction, whether you win the item or not and how much you pay for it is based on how much you bid. In a Dutch auction, whether you win sessions or not is based on not only your bid, but the bids of others and the total number of sessions available. If there are fifty sessions available, then the top fifty bids (this is bids for individual sessions, not user bids, so if one user bids $20 each on three sessions, that counts as three bids) will receive sessions, but they will only pay the amount of the lowest bid for the sessions. In other words, the people who bid the most will receive their sessions first, but people who bid lower amounts will receive sessions until there are none left, and everyone will pay the price of the lowest winning bid. For example, let’s say that on a certain day, there are 50 sessions available and two people bid $100 each on five sessions (10 total bids for $100), 15 people bid $25 each on two sessions (30 total bids for $25), and 30 people bid $10 each on one session (30 total bids for $10). Both people who bid $100 will receive their five sessions and everyone who bid $25 will receive their two sessions, but only 10 of the people who bid $10 will receive their single sessions (the system randomly chooses who will receive sessions in the event of a tie bid like this). However, since the lowest winning bid is $10, all of the users who bid will receive their sessions for $10 each. For more examples, refer to the Session Trading page.

Last Updated: 9/28/2005 12:58:34 PM



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