...a not-for-profit organization founded in 1995 to build trusted digital archives for scholarship. We work with the scholarly community to preserve their work and the materials they rely upon, and to build a common research platform that promotes the discovery and use of these resources. For more information about JSTOR, please contact support@jstor.org. American Economic Association is collaborating with JSTOR to digitize, preserve and extend access to The American Economic Review. http://www.jstor.org Auctions Versus Negotiations By JEREMYBULOW AND PAuL KLEMPERER* Which is the more profitable way to sell a company: an auction with no reserve negotiation with one less bidder? Weshow under price or an optimally-structured reasonable assumptions that the auction is always preferable when bidders'...
Words: 9022 - Pages: 37
...Mohabbat 1112221 Abdul Wasey Faheem 1119949 (Section : 3) FACTS OF THE CASE The defendant had made the highest bid in an auction. The defendant had withdrawn his offer before the auctioneer had knocked his hammer. The plaintiff’s counsel opened the case with as: the goods were put up in one lot at an auction. There were several bidders of which the defendant was the last bidder. The defendant had bid 401. The auctioneer had dwelt on the bidding. As the auctioneer dwelt the defendant said, “Why do you dwell? You will get no more. The defendant said he was informed the worm weighed at least 1300 cwt and was worth more than 401. The defendant asked him if he could warrant it to weigh so much, and receiving a answer in the negative he then declared that he would not take it, and refused to pay for it. It was re-sold on the subsequent day’s sale for 301 to the defendant. Against which the action was brought for the difference. ISSUES OF THE CASE The issues in the case PAYNE against CAVE Saturday, May 2nd, 1789 are: 1. The highest bidder (the defendant) withdrew his offer before the hammer was knocked. The hammer is put down to assure that the bidder’s bid is accepted and there are no more bids to come in. The time given between the bid being made and the hammer knocked is for other bidder’s to bid higher or the highest bidder to withdraw his offer. When a bidder bids an amount he is giving an offer and the offer is accepted when the auctioneer knocks his hammer. An offer...
Words: 1106 - Pages: 5
...Provisions Common to Pledge and Mortgage(PM) 2085. Requisites 1. They are created to secure a principal obligation. 2. The pledgor or mortgagor must be the absolute owner of the thing. 3. Persons constituting pledge or mortgage must have a free disposal of thing or have legal authority. Note: Characteristics: 1. Real - perfected by delivery of thing 2. Accessory- can’t stand on its own. It follows principal. 3. Unilateral- obligation of creditor to return thing upon fulfilment of principal obligation. 4. Subsidiary- 2087. When principal obligation becomes due, creditors may ALIENATE the thing. (alienate-foreclosure; not disposal) 2088. Creditors can’t appropriate/dispose/sell thing. Stipulation to contrary is null and void, and this is known as “pactum commissorium.” 2089. Pledge or mortgage is considered indivisible even though debt may be divided. * If debtor’s heir paid part of debt, there is no partial release/extinguishment of pledge or mortgage until it is fully paid. * Creditor’s heir who received his share of debt can’t return the thing or cancel mortgage. * Exception: Partial release of obligation is possible when each of the thing guarantees only a determinate portion of the obligation. 2090. Pledge and mortgage is still indivisible even if obligation is joint or solidary. 2091. PM can secure all kinds of obligations (voidable or unenforceable)(pure or subject to suspensive or resolutory condition) ...
Words: 2556 - Pages: 11
...LAB PROJECT REPORT LAW OF TENDERS AND AUCTIONS PGPM 2010-12 TERM 1 TABLE OF CONTENTS 1. Auction and tender.……………………………………………………………………………………………………………….......3 2. Auction………………...……………………………………………………………………………………………………………….......3 2.1 Legal Aspect as per The Sale of Goods Act, 1930...............................................................3 2.1.1 Legal Rules Regarding Auction.............................................................................3 2.2 Legal Aspect as per The Indian Contract t, 1872................................................................4 2.3 Auction Terminologies…………………………………….................................................................6 3. Tender………………..………………………………………………………………………………………………………………….......6 3.1 Legal Aspect as per The Indian Contract t, 1872................................................................6 3.1.1 Acceptance and withdrawal of tenders...............................................................6 3.1.2 No Obligation to Accept Lowest Tender..............................................................7 3.2 Tenders Terminology……………….………….………..................................................................8 3. Judicial Pronouncements and Analysis………………………………...........................................................9 3.1 Auction…………..…………………………………..............................
Words: 5012 - Pages: 21
...action with some probability 2. “The game where players undertake actions with uncertain outcomes” is a definition of the game with asymmetric information. Falls 3. In a separating equilibrium with two types of informed player and two possible actions each type of informed player chooses different action.. True 4. Auction is a public sale in which property or merchandise are sold to the highest bidder. True 5. Private Value Auction is one where True * Each bidder knows his or her value for the object * Bidders differ in their values for the object 6. Common Value Auction is one where the item has a single though unknown value. True 7. English auction is one where: Falls * Bidders call out prices (outcry) * Auctioneer calls out prices (silent) * Bidders hold down button (Japanese) * Second-Highest bidder gets the object 8. Second-price auction is one where: True * All buyers submit bids * Buyer submitting the highest bid wins and pays the second highest bid 9. In a second-price auction bidding your true valuation is a dominated strategy. Falls 10. More bidders usually lead to higher prices. True Part 2 (50%) Explanations and/or calculations are required in all exercises!!! Without it you can get maximum only...
Words: 1405 - Pages: 6
...1 INTERNET AUCTIONS AND GAME THEORY Table of content I. INTRODUCTION ................................................................................................................................................ 3 II. MAIN PART........................................................................................................................................................ 4 1. EBAY AND INTERNET AUCTIONS TYPES ............................................................................................................................ 4 2. E-‐BAY BIDDING PROCESS.................................................................................................................................................... 5 3. BIDDING STRATEGIES UNDER GAME THEORY ................................................................................................................. 5 A. Proxy Biding ................................................................................................................................................................... 6 B. Bid Sniping ...................................................................................................................................................................... 6 Bid Sniping: the Optimum Game Theory Strategy to Win Online ...
Words: 2202 - Pages: 9
...Contractual agreement has traditionally been analysed in terms of offer and acceptance. One party, the offeror, makes an offer which once accepted by another party, the offeree, creates a binding contract. Key concepts that are needed to familiarise with in relation to offer and acceptance include the distinction between an offer and an invitation to treat – is needed to be able to identify specific examples of where an offer or an invitation to treat exists. If the maker of the statement clearly intends to be bound by acceptance of the stated terms the statement will amount to an offer. In Harvey v Facey [1893] ,Harvey sent a Telegram to Facey which stated: - "Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid;" Facey replied by telegram:- "Lowest price for Bumper Hall Pen £900." Harvey then replied:- "We agree to buy Bumper Hall Pen for the sum of nine hundred pounds asked by you. Please send us your title deed in order that we may get early possession." The Privy Council held that there was no contract concluded between the parties. Facey had not directly answered the first question as to whether they would sell and the lowest price stated was merely responding to a request for information not an offer. There was thus no evidence of an intention that the telegram sent by Facey was to be an offer. An invitation to treat, on the other hand, is merely an invitation for customers to submit an offer. While it indicates a willingness to...
Words: 1709 - Pages: 7
...118. Negotiations under competitive methods (1)Post-bid negotiations may be undertaken where- (a) the highest bid falls short of the reserve price, valuation or anticipated sale price of the assets; or (b) there is a need to negotiate the conditions of sale. (2) Following approval of the evaluation report, the procedure for negotiation shall be as follows- (a) the evaluation team shall detail the nature of the proposed negotiations, listing the points that (b) the Board or its competent committee shall approve the negotiation plan prior to any negotiations taking place; (c) negotiations shall be held with the best evaluated bidder, with at least three members of staff of the procuring and disposing entity present, except that the members of staff of the procuring and disposing entity, at the negotiations, shall not commit the procuring and disposing entity, to any arrangement, but shall seek the approval of the Board or any of its committees prior to confirming any agreement reached; (d) the negotiations team shall report, in writing, to the Board or any of its committees on the achievements of the negotiations in relation to the objectives of the negotiation document and shall submit minutes of the meeting. The report shall state whether the negotiation objectives have been substantially achieved and shall contain...
Words: 477 - Pages: 2
...design, rarity, and the possible missed opportunity of a life time. As an astute business man, Thomas knows that he must sell at least $10,000 worth of merchandise per hour, so being organized and knowing that the items being auctioned have reached their greatest potential are critical in achieving this goal. All auctions are preceded with previews that allow potential bidders the chance to examine the items closely. Bidders register to bid at each auction by filling out a registration form that includes the bidder’s name, address, contact information, business affiliation if any, tax number, and other demographic/business information. A number is assigned to a bidder upon registering and this number is used to record and track winning bids for the items auctioned. There are “preferred bidders” who are identified as those who repeatedly attend the auctions and purchase items frequently at the auctions. These preferred customers are assigned a permanent number that is kept on file in the office, enabling these bidders the privilege of not having to register each time an auction is held. Some customers register for a bidder number and attend the preview...
Words: 1413 - Pages: 6
...Homework #1 1. Suppose you hire a real estate agent and tell him to sell your house to the highest bidder. You pay the real estate agent a flat fee of $50,000 when the house is sold. You learn that, unfortunately, the agent sells the house to the first bidder at a low price. a. What is this type of problem called? b. What is one way to change the real estate agent’s incentive so he does sell to the highest bidder, instead of to the first one? a. This type of problem is known as an agency problem b. One way to change the real estate agent’s incentive so that he is motivated to find the highest bidder is instead of paying him a flat fee of $50,000 you offer him a commission that pays him a percentage of the house’s sales price. This way he will try to find the highest bidder so he can maximize the amount of money he gets and you can get the best possible price for your house. 2. Suppose you own one share of stock in ABC Inc. and one share of stock in XYZ Co. You can sell both shares at $100, but it will take you much longer to find a buyer willing to pay $100 for XYZ compared to ABC. a. Which stock is more liquid? b. If you had to sell both stocks today, which one would sell for a higher price? a. The stock for ABC Inc. is more liquid because it can be sold more quickly with limited price impact. b. The stock for ABC Inc. would sell for a higher price because it is the most liquid out of the two. 3. National Bank pays 3% simple interest on its...
Words: 1119 - Pages: 5
...mean-variance methodology on comparing estimated price with realized price of auction items. Then this report investigates the ‘hot’ auction items and auction items failed to sell in this auction by statistical data, the result shows that there are around 15 items can be considered as a ‘hot’ item in auction and no item failed to sell in our observation. And then the report has a descriptive analysis about bidders on this auction, and by calculating the ratio of numbers of bidders and the auction items, it gives out that this auction is also a ‘hot’ auction. After that, an estimated profit for this auction is calculated based on realized price of auction items, and a T-estimation method is applied on estimating the 99% confidence interval of average annual profit of the Charleston’s auction house. In addition, there is a comparison between ebay’s average annual profit and the auction house’s average, with a result that ebay has an obviously larger profit than the profit house. 1. Introduction Auction, a trading mechanism, is a public selling process of items at their highest bid (The Free Dictionary). Formed in 1997, Charleston’s is the first and the most successful auction house that travels and sells auction goods in big cities in Australia (CHARLESTON’S FINE ART AUCTIONS 2015). It is well known for its professionalism by providing quality auction items and employing peak-bodies...
Words: 3972 - Pages: 16
...submissions for an RFQ for the supply of supply flap shrouds and equipment bay doors. The pricing received raises some concerns however, as there are large variations in pricing between the lowest price from Marton Enterprises Inc. (Marton) and the highest price from the incumbent, Dollard Plastics (Dollard). There are several viable alternatives for Havilland. They may accept the bid from Marton on the condition that it is assured Marton fully understands the scope, their facilities are sufficiently equipped, and they provide their financials. It will be in Havilland’s best interests not to pursue their policy under the Bidder Selection Board (BSB) to attempt to renegotiate the price lower since Marton already provided substantial savings. The next option for Havilland is to pursue the first option but only given Marton 80% of the work for the first year and keep the incumbent under contract for the remaining 20% of work. The third option is to cancel the RFQ, clarify with the bidders what was unclear in the specifications that resulted in such a wide variation in pricing and go out for bids again. The final option is to attempt to negotiate with the three low bidders for the supply of individual parts, since each of the bidders had one of the lowest prices in each of the three categories. This report recommends Havilland chooses the second alternative to pursue the bid from Marton but maintain a small contract with Dollard for the first year, until Marton has proven it...
Words: 11214 - Pages: 45
...2013 MANAGERIAL ECONOMICS GROUP PROJECT: “US TREASURY BILLS AUCTION PRICING: ANALYSIS OF THE STRUCTURE AND PROCESSES” Professor: Done by: The goal of this paper was to analyze and explain the auction system process held by US Treasury and the possible alternatives for it (multiple-pricing auction). Introduction. The U.S. Treasury Department regularly borrows to finance the Federal Government's debt. From 1980 to 2006, the public debt of the United States grew from $930 billion to $8.68 trillion. Approximately one-half of that debt is held in Treasury bills, notes, and bonds, or "treasuries." The Treasury Department sells these securities at auctions held at the Federal Reserve Bank of New York, and the Bureau of Public Debt (BPD) in Washington, D.C. The rest of the debt is held mostly in federal and federally sponsored agency securities and U.S. Savings Bonds, and is not sold through the auction process.1 The modern auction process for bills, notes, and bonds begins with a public announcement by the Treasury. A typical announcement might read, "The Treasury will auction $11,000 million of 91-day bills to refund $9,000 million of maturing securities and to raise about $2,000 million new cash." This statement clearly describes the 2 goals of Treasury: to refund old debt and to raise new funds. Such announcement is carried by...
Words: 4454 - Pages: 18
...submissions for an RFQ for the supply of supply flap shrouds and equipment bay doors. The pricing received raises some concerns however, as there are large variations in pricing between the lowest price from Marton Enterprises Inc. (Marton) and the highest price from the incumbent, Dollard Plastics (Dollard). There are several viable alternatives for Havilland. They may accept the bid from Marton on the condition that it is assured Marton fully understands the scope, their facilities are sufficiently equipped, and they provide their financials. It will be in Havilland’s best interests not to pursue their policy under the Bidder Selection Board (BSB) to attempt to renegotiate the price lower since Marton already provided substantial savings. The next option for Havilland is to pursue the first option but only given Marton 80% of the work for the first year and keep the incumbent under contract for the remaining 20% of work. The third option is to cancel the RFQ, clarify with the bidders what was unclear in the specifications that resulted in such a wide variation in pricing and go out for bids again. The final option is to attempt to negotiate with the three low bidders for the supply of individual parts, since each of the bidders had one of the lowest prices in each of the three categories. This report recommends Havilland chooses the second alternative to pursue the bid from Marton but maintain a small contract with Dollard for the first year, until Marton has proven it...
Words: 11214 - Pages: 45
...Invitation to treat The legal term ‘invitation to treat’ refers to an statement indicating that someone is interested in negotiating a business deal. It is not a binding obligation or offer, and all parties involved can choose not to take up the invitation to treat without suffering legal penalties. This allows people to make preliminary negotiations without having to commit, creating an opportunity for making business deals without obligations that might discourage parties from exploring the deal. For example, a price tag in a store window is considered an invitation to treat in many areas of the world. It is not a binding offer. A customer can approach and ask to bargain down the price and negotiations may be carried out. The store can also refuse to sell the item, falling back on its right to refuse services because it has not entered a contractual obligation with the customer. This is true even when stores promise ‘special offers’ or price-matching programs. In a book contract law, second edition by Mindy Chen-Wishart state that no offer is made when a party communicates his proposed terms unless he also communicates his commitment to be bound on the other’s acceptance of the terms. A communication may only be a request for a supply of information, not an offer. For example, in Harvey v Facey (1893), H sent a telegram to F asking ‘will you sell us Bumper Hall Pen? Telegraph lowest cash price.’ F replied ‘Lowest price for Bumper Hall Pen, $900’ and H purported...
Words: 3949 - Pages: 16
