Question

18-5 Art Auctions

When a famous painting becomes available for sale, it is often known which museum or collector will be the likely winner. Yet, representatives of other museums that have no chance of winning are actively wooed by the auctioneer to attend anyway. Why?

Answer 1

There Is a maxim which states that “strong losing bidders lead to higher winning bids”. In most of the cases, it is the losing bidder who placed the second highest bid who has the greatest impact on the final price placed on the product to be auctioned. Despite knowing who is going to be the actual or final winner of this auction process, the price which will be paid by the winner will be deiced on the basis of competition. If there is no other bidder then the auctioned price may be very low.

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