P3D Re: ebay question

[jacob@xxxxxxxxxxxxxx (Gabriel Jacob)]

Mike K. writes:
>The winner *always* wins by only a few dollars because
>their reported bid isn't their maximum bid, but only the proxy-bid
>that's one minimum-increment above the second highest bidder's bid.

The winner always wins by only a few dollars BUT this is only true
if YOU happen to be the second highest bidder. If you bid early on
your probably not going to be the second highest bidder. And if
you are, as you mention, you'll loose the bid by only a few dollars
because of how the automated bidding stucture is setup.

The problem is if you bid your maximum bid at the onset of the
auction, your assured that you'll loose the auction. If the winning
bid is way over your maximum bid there is no problem and you think
that is way more than you were willing to pay. But if the winning
bid wins by only a few dollars, often times you'll come to the
conclusion you would have bid a few more dollars to win the auction
if you had the chance. The reason you don't get the chance is
because of sniper bids. 

There are two kind of sniper bids.
1) More often, the person will bid only a few dollars more at the
   last moment (to try to get a bargain).
2) Or less often, the person will bid a higher max. bid if they
   really want the item.
It's true that in both cases the winning bid will be only a few
dollars more (assuming your only bidding against one other person)
BUT the point is that you don't have a chance to bid a few dollars
more to get a good deal if the sniper is a type 1 bidder. Even if
the sniper is of type 2 you don't get much time to think about
how much you really want the item. In anycase you won't know if he
is a type 1 or 2. Thus the logic that ebay proposes, you can bid
your maximum anytime is wrong. Your showing your hand early. Why do
that? 

Therefore if you want to win a bid and get it at a reasonable 
cost, take your time to think about what your maximum bid will be
and bid your maximum at the last moment. You shouldn't have to but
if you don't someone else will.

>In other words, the end price is primarily set not by the high bidder
>but by the second-high bidder, which is true in live auctions 
>as well (except at ebay, the shadow...er... computer knows, but doesn't
>tell).

Yes that is true but the strategy is different. In real life auctions
you don't have much time to think either but at least it is a more
level playing field with the bidders all having the same amount of
time to think how much they want the item. Not the case if you bid a
week before the ebay auction closes.

Motto: The early ebay BIrD doesn't get the 3-D worm!

Gabriel


------------------------------