Government Auctions

In this webpage,
http://www.govdeals.com/eas/index.cfm
Government agencies are able to sell their surplus and confiscated items through the internet. It seems that majority of the auctions carried out here are ascending bid auctions. Intuitively, the auctions are carried out as such because it is more convenient and that it allows the seller to obtain as high a value as possible. However, there is still a cap as both the buyers and seller would know that there is a particular value ie. Market price for the item (which can be a used vehicle or a pony), that the buyer would rather purchase for this same sum of money used for the auction.

http://www.newyorkfed.org/aboutthefed/fedpoint/fed41.html

That is a link to the description on how the Treasury sells government bonds. What the Treasury does is set a total amount of bonds they wish to issue and accept bids (given as the bond yield) up to a certain deadline. They then list the bids in ascending order and accept bids up to the desired amount of bonds is reached. The price for everyone is the lowest accepted bid. There is a delicate balance in bidding because obviously you want a high yield, but risk losing out on being sold the bonds. The equilibrium bid would seem to be just your value. As we went over in class, in a second-price auction, it's best to bid your value and in this auction, the same should hold. At worst, you get the bond at the price you value it for and at best the Treasury accepts a bid higher than yours so you get the bond at a better price than what you bid.