In addition to the main types of auctions covered in class such as first- and second-price sealed bid auctions, a number of interesting buying and selling systems have been devised to suit specific needs. This article (http://www.slashphone.com/70/6770.html) discusses Verizon Wireless’s use of a unique bid auction to simultaneously generate publicity and sales. Subscribers to Verizon Wireless V CAST can participate in a game show called the Limbo Show in which they text message bids for fun prizes such as a new flat screen television or free vacations. However, in this auction, it isn’t the highest bidder who wins the prize but the one who places the lowest unique bid.

The allure to buyers is obvious – they have a chance to win incredible deals. Imagine winning a Hummer for $36.65! I’m not sure if there is an optimal strategy other than dumb luck. Choosing the same bid amount for different auctions is probably not the best strategy, since there may be another person bidding their favorite number on every single auction, and that favorite number could be the same number you chose for everything.

Unfortunately, players still need to pay their bid even if they lose. My guess is that even if you win an item every now and then for a ridiculously cheap price, you probably spend so much money losing all the other auctions you participated in that it all evens out. So, the unique bid auction has elements of an auction and elements of a lottery. I’m guessing that participants will eventually get tired of losing, which in turn would lower the number of bids and make the auctions unprofitable. On the other hand, a large media company with lots of capital like Verizon seems ideally suited to generate enough interest in the game to make the unique bid auction work, even if it is short-lived.