“TheTime Capsule Collection of Early Proof Sets”
The article “The Time Capsule Collection of Early Proof Sets” is taken from the “COINWeek” website. Recently in 2011 proof sets have been discovered and were auctioned. The story began when a dad took his son to the Philadelphia Mint in 1883 where he bought a proof set. Ever since that first visit, the boy went to the Mint every year to purchase a proof set until 1916. He left the coins wrapped in the original paper and envelope from the Mint. He wrote the year of the proof set and stored it in an oak box.
The Heirs of the oak box met with the owners of Centennial Auctions to do an appraisal on the collection of coins. One of the most notable coins was the Morgan Dollar which was estimated to be worth 60K-70K. The heirs asked Centennial Auction to auction the coins and the auction was held in New Hampshire. The auction was filled with dealers and coin collectors. Each of the proof coins would be offered individually to the highest bidder. Bidders bought the coins at a much higher price than the estimated price of the coin and on average each of the proof sets was sold at $51,500.
This article shows a real life example of a first price auction taking place. It is interesting to see some of the concepts learned in class being applied to real life situations. Some of the strategies for a first price auction were used in the auction. For example, for the proof set with the Morgan Dollar, the bid initially was $134,000 and after a few minutes the bid reached$258,750. This increase in the bid shows the descending nature of the first price auction. So people bid at a lower price than the true price they value the item in order to have a higher payoff. Also people stop bidding when the bid is higher than what they value the item. The author attempted to buy some coins but all the bids were higher than what he values them which shows an example of the above point about stopping to bid when price reaches the price of what they value the item. If the author continued bidding then he would have a negative payoff and in this case it would be better to stop bidding just like what he did.
http://www.coinweek.com/news/featured-news/time-capsule-collection-of-early-proof-sets/