Interesting situations arise in auctions when the participants (the auctioneer and the various bidders) wish to deal in different currencies. Such a situation exposes at least one of the two parties (bidder and auctioneer) to the risk of exchange rate fluctuations. The present work provides a framework and a model for analyzing such issues. It also provides specific auction models for some of the popularly used auction mechanisms (Sealed Bid, Dutch and Open Outcry), which can handle the problem of exchange rate fluctuations.
By: Vipul Bansal
Published in: RI02014 in 2002
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