So far in our analysis little has been said about the mechanics by which buyers and sellers transact. It tends to be implicitly assumed that sellers post prices for their products and buyers decide how many units of each product to buy, possibly not purchasing any units at all. Other terms of the contract between buyers and sellers are straightforward. In daily life in developed nations, most transactions are carried out in this way. An alternative way to transact is by individual negotiations where the buyers and sellers make offers and counter-offers on prices and other terms of the contract, until agreement is reached or both parties walk away. Inbetween these twomethods of conducting a transaction is the auction.While there are several ways an auction can be carried out, each type of auction has several common features. First, an item is offered for sale at a point in time. Second, a set of potential buyers are assembled where each may potentially suggest (or bid) one or more prices at which they are willing to purchase an item. Third, if the highest price is acceptable to the seller, the item is awarded to the buyer who has suggested this highest price.