Among the basic auction mechanisms are:

1. Ascending-bid auctions.

2. Descending-bid auctions.

In ascending-bid auctions, the bidders raise the object’s price by providing higher and higher bids, until only a single bidder remains and the price paid is equal the last bid. This type of auction is “open” and the participants know the best current bid. There are many variants to this basic ascending-bid auctions.

In descending-bid auctions, the auctioneer starts with a high initial price and progressively lowers it. The price is posted and known to all participants. The first bidder to indicate a willingness to take the object at the prevailing price is the winner. There are also some variants to this type of descending-bid auctions.

During the last years, online implementations of auctions have become a prominent part of online systems. The emergence of online auctions in the Internet and Computer Mediated Communication (CMC) technologies created the basic motivation for our research.

We study the social process of auctions, as affected by the system design of its online implementation. Individual and group behavior of participants in online arrangements has become the focus of increasing study. Much of the focus has been on the psychological aspects of participants’ cognition, choices and actions. However, beyond the individual level of analysis, others influence online behavior as well. With the advent of online communication technologies, forums and contexts in addition to evidence that suggests that bidders may not enter auctions with fixed and immutable values, participants in online activities such as auctions, are more likely to be affected by the proximity and availability of others.

More attention needs to be paid to group and social-psychological inputs that may impact personal online behavior such as auctions. Our study turns attention to understanding behavior in online auctions from a social perspective. Namely, how can the design of online auction systems harness the expression of others’ presence to impact the behavior of individuals in online auctions?

We use computer simulation as our research tool. Until now, we developed two auction simulations:

- An ascending-bid “English” auction simulation

- A descending-bid “Dutch” auction simulation

These simulations are used in an experimental setting, which allowed varying levels of access and communication between auction participants.  The differential outcomes of participation under different levels of social interaction serve as a test of the various social-psychological theories.