Open Outcry Vs Sealed Bid

Open outcry auction: Bidders know the high bid at all times, and have the option of beating it.

Sealed bid auction: Bidders submit written bids and do not know what others bid, or (often) how many bidders there are before the winner is revealed.

There are four factors to consider here:

  • The number of potential bidders.
  • The degree to which bidders’ valuations are “affiliated”.
  • The degree of bidder risk aversion.
  • The need to deter collusion among bidders.

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