Patent ID: 8719111

Claim:
A method in a computer system for conducting a lowering reserve auction, the method comprising: creating an auction by specifying an item for auctioning, a retail price of the item, a total number of options offered for sale during the auction of the item, a sale price of each option, and a time duration for the auction, wherein each option corresponds to a right to place a single bid; while the auction is open, selling at least one option at the sale price of each option to at least one user, thereby allowing the at least one user to submit a bid for the item specified for auctioning; while the auction is open, receiving a bid for the item from the at least one user; determining, by a processor, if the total number of options offered for sale for the auction of the item are purchased; responsive to determining that the total number of options offered for sale are purchased, causing, by a processor, the auction for the item to expire and designating as the winning bid the highest bid amount received; determining, by a processor, if the auction time for the item has expired; responsive to determining that the auction time has expired, determining, by a processor, if the combination of the amount of the highest bid received and of the proceeds from the sale of the options is greater than the retail price of the item; responsive to determining that the combination of the amount of the highest bid received and of the proceeds from the sale of the options is greater than the retail price of the item, designating as the winning bid the highest bid amount received; and responsive to determining that the combination of the amount of the highest bid received and of the proceeds from the sale of the options are equal to or less than the retail price of the item: cancelling the auction; and refunding, to the at least one user, the sale price for the at least one option sold to the at least one user.