Live From Sothebys

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Posted By: Scott

Peter,

All markets have rules. IN this case the current rule allows the auctions to do this. All I am saying is that it allows for individuals (or at least some) to be making decisions based on incorrect information. In most markets, over time the market would adjust and the buyers would change behavoir and prices (and practices) would drop as buyers would discount the fact that others might want the same item.

Since the items we are discussing are merely items with perceived worth and usually some type of scarcity, it is likely that for top end product this rule can continue to exist and the market won't self correct. The rise of the buyer's premium in this market over the past 20 years is testimate to that (though I personally often choose to not participate in some auctions that I would otherwise due to this but I'm obviously in a minority)

I would disagree that auctions are there to sell - though I would agree that this "book bid" is a form of selling rather than auctioning. Auctions are there to gather a group of buyers and execute a transaction at the highest point on the demand curve at a set point in time for an item or group of items. They try to gather those buyers that individually will have demand points higher than the "average buyer". Selling introduces an element of ongoing time, discerning value and discrimination.

Your probably right in that Sotheby's has found a way to "sell" while creating the appearance of a true action.