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.
