McClendon Wine Collection Auction
On Saturday September 17th, Aubrey McClendon held a wine auction in a restaurant in Chicago which included 1,057 total lots. All 1,057 lots offered were sold, which ultimately totaled to be worth $8.4 million. Clearly McClendon is one of the most well established wine collectors around, but even he did not value his collection that that enormous amount. The collection was originally expected to go for closer to $6 million, but given McClendon’s reputation and prestige as a wine collector, bidders clearly splurged just to call a McClendon bottle theirs.
This historic event serves as a great example of auctions as discussed in class. The ascending bid, or english, auction type was used at McClendon’s event. This is where an auction is performed in real time with people physically and electronically. The price of a lot gradually increases until all but one bidder drop out. McClendon’s auction may have actually seen such great success due to this auction type. Despite having estimates for each wine item sold, McClendon did not know exactly how much the buyers valued the items. In many cases, lots sold for many times more than what they were expected to. This suggests that value was created to the buyers since the wine was coming from McClendon’s cellar. This is proven by the fact that “many of Mr. McClendon’s least expensive bottles sold for multiples of their estimates.” The buyers clearly valued the wine from McClendon’s cellar more than the owners of it did, thus a seller surplus was created.
Had another auction type been used, the surplus may not have been so high. For example, if a second price auction type had been used, the dominant strategy for buyers would have been to only bid what the wine was worth to you. Since this style of auction uses independent, private values, the amount different lots sold for could have been drastically different.
Considering the auction attracted nearly 1,000 bidders from 17 countries, I think the event was bound to be successful. Still, it is worth noting how the selection of the auction type can impact an auction, and at what price certain items ultimately sell for.
http://www.wsj.com/articles/oklahomans-turn-out-for-auction-of-aubrey-mcclendons-wines-1474229961
http://www.bloomberg.com/news/articles/2016-09-18/aubrey-mcclendon-wine-collection-brings-8-44-million-at-auction