Definition of Auction

A marketplace instrument where potential buyers bid on a particular product, assets and/or services. The person who places the highest bid purchases the item on auction. Historically, auctions were a group affair where the buyers, seller and an auctioneer would be in the same place. Potential buyers would then place their bids in a competitive setting and the auctioneer would act as the moderator or mediator between the seller and the buyer who ends up being the one who places the highest bid. In today's digitally savvy world sellers can place their items on sale and buyers can place their bids while sitting at their desks in the office or at home. Online shopping sites such as E-Bay act as the auctioneer in this scenario where people can bid for products and purchase according to the traditional principles of auction.