 Auction theory is also used as a tool to inform the design of real-world auctions; most notably auctions for the privatization of public-sector companies or the sale of licenses for use of the electromagnetic spectrum.Auctions are characterized as transactions with a specific set of rules detailing resource allocation according to participants' bids.They are categorized as games with incomplete information because in the vast majority of auctions, one party will possess information related to the transaction that the other party does not (e.g., the bidders usually know their personal valuation of the item, which is unknown to the other bidders and the seller).