Case Study: Auctions and Dynamic Pricing
Case Study: Auctions and Dynamic Pricing
Overview
There are many types of auctions, each with strengths and weaknesses at uncovering the real price or value of an item. Auctions are widely used in finance, e-commerce, and e-games. They are also widely used to generate revenue for not-for-profit organizations.
The following video describes auctions as price discovery mechanisms:
The Ideal Auction.
Use the video on auctions and at least three academic or high-quality business publications (see acceptable types below) to compare and contrast English auctions and Dutch auctions, and sealed-bid first-price auctions and Vickery auctions.
Instructions
Address the following questions in 5–7 pages:
Compare and contrast how each of the following uncovers value:
English and Dutch auctions.
Sealed-bid first-price auctions and Vickery auctions.
Compare and contrast surge pricing and congestion pricing. Give an example of each currently in use.
Identify three examples of auctions used in finance, e-commerce, and/or e-games. Explain the following in-depth:
The need for an auction to uncover value in the product or service.
How the type of auction used to uncover the value of the product or service is better at uncovering value than other types of auctions.
What are the advantages or disadvantages of auctions as revenue generators for not-for-profit organizations?
Suggest ways in which a for-profit company, such as the company for which you work or a company for which you aspire to work, can use auctions or dynamic pricing to better uncover value and increase revenue.
This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.
Acceptable Types of Publications
A high-quality, professional business publication is one that is primarily directed at reporting or analyzing the workings of the business. Examples are the Wall Street Journal, Bloomberg, and Reuters. Avoid general news publications such as USA Today, the Washington Post, and the New York Times. Other articles and resources can be found at the Strayer Library.
Please do not rely on Wikipedia, Investopedia, or similar websites as references at any time in this course.
The specific course learning outcome associated with this assignment is:
Propose ways in which a company can use auctions to better uncover value and increase revenue.
Risk describes a situation in which we do not know the outcome, but we do know all the possible outcomes and can assign probabilities to each of these outcomes happening. Risked can be managed. Knowing the potential costs of errors, allows managers to hedge and/and or insure against costly outcomes. For example, ever since you quarterback had shoulder surgery, he only connects with the receiver one out of every four passes. You know that your kicker can score 80% of the time when your team is within 25 yards of the goal. You can make the calculation. Every time you are within 25 years of the goal, an attempted pass will get .25*6 points or the point payoff is 1.5 points. Versus the point payoff for a kick is .80*3 or the point payoff is 2.4 points. You can make a plan for the game.
Uncertainty is the situation in which we do not know all the possible outcomes and, therefore, can’t reasonably assign probability to outcomes. Uncertainty is the unknown factor(s) in decision making for managers. Per the Warfighting Manual of the U.S, Marines, Because we can never eliminate uncertainty, we must learn to fight (manage) effectively despite it. We do this by deploying simple, flexible plans; planning for likely contingencies; developing standing operating procedures; and fostering initiatives among subordinates.” (See reference in the Welcome on this week’s page.) Two entirely new teams have just joined the league. They will play each other. Someone will win, but who? (Beware of false probability, each team does not necessarily have an even chance of a win)
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