How does an "absolute auction" differ from a "reserve auction"?

An absolute auction is defined by its unique feature of having no reserve price, meaning the item will be sold to the highest bidder regardless of the bid amount. This creates a sense of urgency and excitement among bidders, as they know that there is no minimum bid that must be met for the sale to proceed. This is particularly advantageous in attracting bidders who might be uncertain about the value of the item, as they can potentially get a great deal without the fear of being shut out by a reserve price.

In contrast, a reserve auction includes a minimum price (the reserve price) that must be met for the item to be sold. If the highest bid does not reach this predetermined threshold, the auctioneer has the right to withdraw the item from sale. This difference fundamentally affects the bidding dynamics, with absolute auctions often resulting in more competitive bidding as participants vie for the item without the worry of a minimum price.

The other options present conditions that do not accurately describe the fundamental differences between the two types of auctions. For instance, both auction types typically have set ending times, and neither is limited to specific bidders nor confined to a particular format of online versus in-person sales. Thus, the defining characteristic of an absolute auction is indeed its lack of a reserve price