KELLY MCEVERS, HOST:
Right, so if you have something to sell, it's pretty straightforward. You name your price, and you wait for a buyer. But sometimes, sellers don't know what price to give or don't want to wait for someone to come along. For them, there's another option.
JACK LYON: One hundred - two hundred, three, four, four, five, six, seven - seven, eight, eight, nine hundred.
AUDIE CORNISH, HOST:
The auction - Keith Romer with our Planet Money team recently went to an auction of construction equipment in Long Island, N.Y., to learn the lessons of a marketplace with no price tags.
KEITH ROMER, BYLINE: I'm in a parking lot filled with forklifts and dump trucks and backhoes. At this point, the price for every single thing here is a mystery. I pick the biggest machine I can find, a caterpillar excavator, and I camp out there. This thing weighs 45 metric tons and has an arm and a scoop that can knock down a wall.
What are we looking at right here?
DAVE CAMARA: It's just a big digging machine, you know?
ROMER: Dave Camara wants it for his slate quarry up in Vermont. He drove five hours to the auction with his two sons.
What's your name, sir?
GRAYSON CAMARA: Grayson.
ROMER: How much do you think your dad should pay for this machine?
GRAYSON: Fifty thousand.
ROMER: Fifty thousand - he's looking for a bargain.
The digger is going to sell today no matter what. Whether the Camara's get a bargain depends not on the seller but on who else wants it. Today, that means 81-year-old Don Burns. Don's a stone quarrier from Pennsylvania. He walks with a cane and likes to play up how old and feeble he is.
DON BURNS: I have hard hearing. I don't see good. I don't feel good. And I don't look good.
ROMER: Make no mistake, though. Don Burns is plenty sharp when it comes to bidding. Don and Dave and all the other people who want the digger, their competition for it will be what ultimately sets the price. To try to keep the price low, some bidders will point out a machine's flaws. They might even drain the battery to make other bidders think the machine doesn't work. The auctioneer, on the other hand, he's trying to drive the price up. Real bidding will start at $50,000. But first, he tries out a huge number.
LYON: All right, here we go, here we go - 125,000 - 125 and 125.
ROMER: The auctioneer, Jack, knows $125,000 is crazy. This is called the fish price. It's there just to anchor the bidders to a higher price. Anything less than 125,000 will feel like a bargain. Eventually, Jack backs down to 50,000 and things take off.
LYON: Here we go - 50,000, 60,000, 70,000.
ROMER: Jack's fast talking, by the way, that's just another way to drive the price up. Speed makes it hard for bidders to make a good decision. What if I miss out? Jack's hoping to cause auction fever. That's the technical term for one of those bidding wars where people get too competitive, too attached to winning to make rational decisions.
LYON: Roger, 67 and a half, 70,000 - 70,000.
ROMER: The bidding tops out when the old man, Don, bids $82,000.
LYON: You know what, Mike? Sell him the machine. Mr. Burns, Pennsylvania, number is...
ROMER: It all goes so fast that when it's over, 8-year-old Grayson still isn't sure what happened. Even now he's telling his dad to bid.
GRAYSON: Bid.
CAMARA: Huh?
GRAYSON: Bid.
CAMARA: On what?
GRAYSON: On this.
CAMARA: They already sold it.
GRAYSON: What? Who?
ROMER: This competition to buy the digger is actually a funny kind of cooperation. Together, the bidders and the auctioneer have decided on a price and an owner.
BURNS: I really didn't need it. I got three of them.
ROMER: The old man, Don Burns - he's pretty sure he got a bargain. And the seller, he knows that at least today, he got the highest price that anyone was going to offer. What Don needs to figure out now is how he's going to get that big digger home. Keith Romer, NPR News. Transcript provided by NPR, Copyright NPR.