What is the difference between an absolute auction and a reserve auction?

An absolute auction is characterized by having no minimum bid, meaning that the item will be sold to the highest bidder regardless of the final bid amount. This format creates a sense of urgency and excitement among bidders, as they know that they have a chance to acquire items at potentially lower prices. The lack of a minimum threshold encourages more participation, as bidders feel they may secure a good deal without the risk of being outbid at an artificially high starting price.

In contrast, a reserve auction sets a minimum price that must be met for the item to be sold. If the bidding does not reach this minimum, the auctioneer has the discretion to not sell the item at all, which can sometimes lead to disappointment among bidders who were expecting a more competitive bidding process.

Points about the other options clarify their differences. While it's often true that absolute auctions can feature high-value items, this is not a defining characteristic of the auction format itself. Registering to bid is a common practice in both types of auctions, but it is not exclusive to reserve auctions, making it not a distinguishing feature. Therefore, understanding that an absolute auction guarantees the sale regardless of the bid amount is essential for recognizing its unique characteristics in the auction landscape.