There are a variety of styles of auctions. “Dutch auctions” are the type where a price continues to go down until a buyer is determined. These types of auctions are also referred to as “descending bid auctions.”
Dutch auctions typically include a Dutch clock device that shows the sequentially descending price. Local potential buyers watch the price on the Dutch clock and submit a bid for a price responsive to the clock reaching that price. State of the art systems include bidding devices that identify buyers and enable them to submit a bid including information regarding the amount of the product that they desire to purchase.
According to current standards, there are several ways for the Dutch clock to be stopped during an auction cycle. First, when a buyer indicates a desire to purchase some of the currently offered items at the current price, the clock is stopped and the sale is awarded accordingly. Alternatively, a seller may stop the auction cycle or the auctioneer may stop the auction cycle according to rules established at the various auctions. Other ways that the clock stops includes the price declining to a preselected minimum price, which may be zero or greater, depending on the situation.
One hindrance to the success of Dutch auctions is the perceived aggressive and intimidating environment of the auction. At declining bid auctions, decisions are made in fractions of a second and are completely binding. During busy seasons there is an additional sense of stress and tension at the auction gallery. The very competitive nature of the marketplace, the speed and size of the auction, and the experience of most of the potential buyers frequently intimidates new or inexperienced auction buyers. Additionally, the nature of the Dutch clock device makes any mistakes (i.e., a bid at too high of a price) very public, which presents a humiliation factor to some that is enough to discourage them from attending the auction.
Another drawback of current Dutch auction systems is the inconvenience of having to attend the auction at the auction site. Additionally, the auctions of agricultural products typically start very early in the morning and the typical buyers are located far from the auction site so that significant travel inconvenience is a factor.
With advances in technology, Dutch auctions have been conducted with potential buyers being located at remote locations from the location of the auction clock and the item to be purchased. Such systems, however, present a disadvantage to the remote buyers because the awarded sale in a Dutch auction is typically given to the first bid received at a given price. Therefore, any communication delay from a remote location may result in a potential buyer losing out to a local bidder who is present at the auction site. Additionally, remote buyers may not get an expected price because the price can typically decrement by a selected unit of currency every forty milliseconds. A one-tenth second delay may result in a significant price disadvantage.
There have been attempts at addressing the disadvantage to remote buyers such as allowing the remote buyer to submit the intended price along with the clock stop command. While these methods have not proven completely satisfactory, they have at least enabled remote buyers to participate in declining price auctions. Other attempts have been made to address the situation of remote buyers in auction cycles, however, these do not appear to be sufficient to address the needs of a declining or descending price auction style. One example is shown in the European patent publication EP 0828223. In that document, a series of decision-making rules are applied to various bids in order to sort through the bids and award a sale to a single buyer when there are competing bids that may conflict based upon time or amount, for example. The decision-making rules of that proposed system, however, do not appear useful in a descending price auction where the sale is typically awarded to the first buyer to submit a bid.
There is a need for a Dutch auction system that allows buyers to compete from a remote location to avoid the tension and stresses associated with being at the live auction while not handicapping the remote buyers because of communication delays as described above. This invention provides such a system and enhances the Dutch auction process.