Auctions’ history reaches 500 B.C. when, according to Herodotus, auctions with women for marriage were held annualy in Babylon. The auction began with the women considered as the most beautiful and progressed to the least.
In 21st century, auctions have become so known and common that it’s difficult to find an innovative use of them. At least, that was my opinion until I heard about Reserve Bar stock exchange.
This stock exchange themed bar opened in London, UK in 2015. Its main idea is based on drink prices swinging up and down according to the clients’ demand. The bar operates “beer market”, “spirits market” and an “alternative market”. Clients can observe price changes on real time exchange screens. When the prices climb too rapidly, they trigger a market crash, which is announced by bells and rings. As a result, the exchange market plunges between 35% and 40%, lowering the drink prices far below their usual levels. There is also a secondary market for clients who succeeded in buying very low and want to sell the drinks with a profit. What also seems interesting is that the bar offers an application for clients to reserve drink prices ahead of time. The idea behind it is to lock the price before it gets higher e.g. during the weekend.
The question here is:
Is this idea profitable for the bar? Does it pay off for clients? And would you like to go there?
Sources:
https://www.marketwatch.com/story/when-this-market-crashes-traders-get-trashed-2015-07-17
Krishna, Vijay (2002), Auction Theory, San Diego, USA: Academic Press
Thanks Aleksandra for introducing this interesting Bar concept to us. I have to admit that I was already quite impressed about the numerous examples of auctions in the lecture since I never heard about the “Hollywood Stock Exchange” before and, additionally, I did not think about reverse auctions being a type of auction. But the “stock-auction-bar-concept” sounds very interesting to me. Especially in London where the price standard is pretty high, this sounds like a promising option to get cheap drinks – at least when demand is low. I could imagine that the bar is especially popular among business students who want to make a good bargain and therefore would be willing to drink during less popular times and at the same time they could apply their learnt knowledge about stock markets. I do believe that this concept is profitable since market mechanisms should automatically drive prices to profitable level.