29th july 2015
Tuesday, got to work super early on this day too and got ready for the day, only to have my colleague come in and sing songs of praises to the lord for saving her life. She said she left her home at around 5.20 only to get to the bus stop and witness a disaster happen in front of her eyes and it claimed lives.
She was at the bus stop when a body suddenly landed in front of her from the opposite street. He was hit by a trailer and died on the spot. Two trailers were involved. The trailers were doing some fast and furious things when this happened. One of the drivers died too but the other stayed alive. I can only imagine how terrifying that is. I really felt for the guy that died. I pray he is in a better place now with the lord. May God protect our going out and coming in. I was devastated when I heard this.
On getting home, I was able to read something on auctions relating to demand and supply in economics.
There are various types of auctions with different rules for determining the winner and the price to be paid. Two popular types are the common value auctions and a private value auctions. In a common value auction, the value of the auction will be the same to all bidders, but this would be unknown to the bidders. So bidders estimate what they think the value would be. Because auction participants estimate the value with error, the bidder who most overestimates the value of a lease will be the highest (winning bidder). This is sometimes referred to as the winner’s curse, and the winning bidder may have losses as a result.
A private auction on the other hand is distinct, the item of auction has a different value to each bidder, and he does not bid higher than the value he places on the item.
Ascending price auction, as the name implies is an ascending type of auction where the bidders can bid an amount greater than the previous high bid, and the bidder that first offers the highest bid of the auction wins the item and pays the amount of the bid.
A sealed bid auction is like a closed bid where each bidder provides a bid for the item which is unknown to the other bidders. The bidder with the highest bid wins the item. The term reservation price refers to the highest price that a bidder is willing to pay. An optimal price for the highest bidder would be the price slightly above what the second highest bidder was willing to pay.
A second price sealed bid is an auction whereby the highest bid wins the item, just like the other auctions. But the twist is that instead of paying the amount he bids, he pays the amount the second highest bidder bids. In this case, the bidder may bid above his reservation price.
Descending price auctions or dutch auctions. Here the auction begins with a price greater than what any bidder will pay and this price is reduced until a bidder agrees to pay it. The trick about it is that the item would be split into units, each bidder may specify how many units she will purchase when accepting an offered price. So if the first bidder agrees to buy a specified unit at a specified price, for example buying 100 units at $1000, subsequent bidders would get the remaining units at lower prices as descending offered prices are accepted.
Robert Pyndick., Daniel Rubinfield., Microeconomics (8th Edition)
Dominick Salvatore., Schaums outline of microeconomics
Paul Krugman., Robin wells., Microeconomics (4th edition)