When it comes to selling an asset, it’s helpful to remember that it only takes two people to make an auction. Auctions result in higher sales prices as it’s not just the value of the thing being purchased, but the dynamics of winning. In the sale of a company for example, it’s not just about buying the company but preventing the other party from getting it.
What’s the lesson? Creating an auction for an asset is clearly better and all you need is two interested parties which is a low enough number that it is always worth the effort.
See also:
- Auctions induce feeling of loss aversion
- Mentioned by Paul Graham on the Tyler Cowen podcast when talking about the art market