What defines an auction without reserve?

An auction without reserve is defined as an absolute auction. In this type of auction, the seller has agreed to sell the item regardless of the final bid amount, meaning there is no minimum price that must be met for the item to be sold. This provides a clear incentive for buyers, as they know that the item will be sold to the highest bidder, regardless of how low that bid may be. Buyers participating in an absolute auction have the assurance that their bid will not be rejected if it meets the terms set forth by the seller, creating a more competitive bidding environment.

In contrast, other terms associated with auctions can introduce conditions that may limit the sale. For instance, situations involving liens or guarantees about the highest bid do not align with the principles of an auction without reserve. Additionally, while sellers may participate in the bidding in certain auction formats, it does not constitute the core definition of an auction without reserve. The stark distinction of being an absolute auction gives this type of auction its unique characteristic of immediate sale to the highest bidder, without reservations or contingencies.