If you’ve ever watched Bargain Hunt, you’ll know that one method of allocating items in limited supply is an auction. In case you haven’t watched it — participants on the show purchase a collection of antiques and other items which they hope will make them a profit, and at the end of each episode these items are auctioned.
While an auction itself makes for exciting viewing, it provides more than just entertainment value. It solves the allocation problem by finding the bidder who’s willing to pay the most and in the process determines the price.
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