Car Auctions

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Car Auctions

Post  JulianJ on Mon Jun 01, 2009 12:53 am

http://wheels.blogs.nytimes.com/2009/05/20/vintage-toyotas-surprise-at-auction/?scp=8&sq=auction&st=cse

After reading that article, I wonder why in the world anyone would shell out so much money for an old school toyota. It is by no means a brand predicated on making classics or auction-worthy vehicles. Yet somehow there were relatively high dollar sales. I blame it on a few things that we've seen previously in this class. One is outlined in the first paragraph and has to do with buzz. They say that the car collectible world was speculating that a day would come when japanese cars would be hot ticket items. The instant someone kicks that off, we're bound to get an information cascade welling up to an auction that brings in way more money that it should. One example is a Corona that doubled in value over the past two years. Another factor that could drive prices up is that people don't really have a set value going in or if they do, they'll get caught in the heat of the moment and add a value to winning the auction even if it's at a price higher than what they originally wanted to pay.

JulianJ

Posts : 18
Join date : 2009-04-13
Location : Maple Penthouse

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Re: Car Auctions

Post  Jacquelyn S Thich on Tue Jun 02, 2009 1:03 am

I agree with that; not knowing one's true vaule for an item can easily cause the bidder to overbid. Also some people who may be very invested in an item will continue to bid just to outbid the other bidders. I could see this happen in more cases when the bidding increments are very small; people are more willing to pay that extra amount in hopes of an item. Also, the idea of an information cascade leading to bidding over the real value is not beneficial to the bidder; I don't see why someone would want to tell others about an item because this will just increase the price. On the other hand, these information cascades are of great benefit for the seller because more people believing an item is more valuable than it is results in more and eventually higher bids. This would be even better if it were an all pay auction.

Jacquelyn S Thich

Posts : 28
Join date : 2009-03-31

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