Dictionary :: Auctions

Glossary of game theory terms.

Dutch Auction

A type of first price auction in which a "clock" initially indicates a price for the object for sale substantialy higher than any bidder is likely to pay. Then, the clock gradually decreases the price until a bidder "buzzes in" or indicates his or her willingness to pay. The auction is then concluded and the winning bidder pays the amount reflected on the clock at the time he or she stopped the process by buzzing in. These auctions are named after a common market mechanism for selling flowers in Holland, but also reflect stores successively reducing prices on sale items.

updated: 12 August 2005