Online Guitar Auctions
Brave New World: A Guide to Navigating Online Guitar Auctions
With the existence of the Internet, the market for vintage guitars exists also on a virtual level, through online auctions. In the article, the author distinguishes between several different types of virtual auctions that can exist/are the most common for vintage guitars. The first category of auctions is a “no-reserve” auction which basically functions as a first price ascending auction. The second category of auctions is a “reserve” auction which is the same but the item will not be sold until it reaches the reserve price. The third category of auctions is the “BIN” or “buy it now” type of auction where the seller offers a price that a buyer can immediately buy the item with while also allowing for an “no-reserve” auction if no one chooses to “buy it now”.
For all of these auction types, the best strategy for the buyer is to stick with their initial value for the item. This is the dominant strategy in a first price auction, or an auction where the one who wins the item is the buyer who bids the most and ends up paying their own bid. This is because if the buyer bids more than their own value, they end up having to pay more than what they value the item for which is ultimately a loss in profit for the buyer. If the buyer bids less than or equal to their own value, while there is the risk of losing the item in the bidding the buyer will only have to pay for the value or less than the value of the item. The article states this as well, saying that ultimately the buyers should always bid until they reach their initial value for the item.