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Consider a home buyer who might hit a budget ceiling within minutes. Or a growing manufacturing business who can outbid a larger competitor, only because the“ rules of the game” are clear and the buyer believes the factory in question is worth the price.
Certain auction designs can be used by policymakers to assist small and medium enterprises( SMEs). For example, set-aside auctions can attract more small enterprises and achieve lower costs. This could have important application in South Africa, where SMEs are in dire need of momentum.
4. Winning bid, winning feeling
Auctions are markets too, but they stand apart in their psychological impact. Evidence suggests that people value the transparency and trust an open auction can foster, along with the sense of control it provides. How many transactions in conventional markets leave you exhilarated? Likely very few. Auctions, however, can spark genuine excitement.
Of course, emotion is not necessarily a boon when bidding. Auction fever is real, and it can push bidders beyond rational limits. Still, the psychological dimension is not merely a distraction- it is a source of potential advantage. The bidder who harnesses the feelings can outperform the competitor who doesn’ t.
Be it a design solution to outwit corrupt actors in a multi-billiondollar spectrum allocation or ensuring a fighting shot for a“ David” entrepreneur battling for an asset against“ Goliaths”, auctions have an indispensable role to play in today’ s economy. Their capacity to ensure transparency, benefit all participants, and unearth sensible prices where traditional markets systematically fail is not just good for auctioneer and bidder alike, but a lever for efficient economic outcomes that unlock value for industries and markets alike.
38 REI MAGAZINE OCTOBER 2025