Ebay - someone explain it to me?
Posted by: Paul Hutchings on 20 October 2004
This might make me sound extremely stupid, but I was having a conversation with a mate at work today, something along the lines of -
"if i see something I want on ebay and it has 7 days left on the clock, why the hell would I bother to bid on it now"
And neither of us could come up with a decently sound reason to do so (that might say more about us than anything else though).
So, would someone explain you would do so?
It seems on every item I've ever kept an eye on the price has done jack shit for the length of the auction only to go nuts in the last 30 seconds as people frantically try to oubid one another.
Paul
"if i see something I want on ebay and it has 7 days left on the clock, why the hell would I bother to bid on it now"
And neither of us could come up with a decently sound reason to do so (that might say more about us than anything else though).
So, would someone explain you would do so?
It seems on every item I've ever kept an eye on the price has done jack shit for the length of the auction only to go nuts in the last 30 seconds as people frantically try to oubid one another.
Paul
I like being in there for the kill at the end.
If you assume that the seller has mates or other accounts to drive up the price, you won't avoid it by hanging back. I had an item selling a couple of weeks back with no bids - but 26 watchers! You know they are there waiting anyway, so it makes no difference. Sure enough someone gave in and bid with 2 days to go and it went skywards.
If you assume that the seller has mates or other accounts to drive up the price, you won't avoid it by hanging back. I had an item selling a couple of weeks back with no bids - but 26 watchers! You know they are there waiting anyway, so it makes no difference. Sure enough someone gave in and bid with 2 days to go and it went skywards.
Patrick,
Even if your bidding behavior is completely rational, the other bidders' may not be, as Justin's example illustrates. It's well-known that buyers will often rationalize a series of small incremental increases in the price of something they really want, even when they would not rationalize the sum of those increases if it's presented to them in one go. This is one of the irrationalities of buying behavior that eBay allows sellers to exploit.
No, it would be like a sealed-bid auction if everyone used off-site proxy bidding. The computers would just sort-out the highest opening bid in the final seconds.* Here's a paper describing why (including an amusing story of how eSnipe was sold on eBay):
http://www.economics.harvard.edu/~aroth/papers/eBay.ai.pdf
Some buyers have complained that sniping somehow harms eBay buyers. I think they're wrong; in fact, I now think that it's the non-snipers who are harming the rest of us. If everyone used off-site proxy bidding, I think final prices would fall (within the limits of the laws of price and supply, of course). Indeed, the whole used-goods market would be further rationalized. So the non-snipers like you, Patrick, are hurting the rest of us by unnecessarily increasing selling prices on eBay.
*Edit: thinking about it, this situation would be slightly better that sealed-bids, since the winner would pay at most only one bid increment above the second-placed bid, which would not always be their maximum bid. So you'd have the best of both bidding systems: the rationality of sealed-bid auctions (since everyone is bidding only their pre-auction determination of value) and the incremental wins of normal auctions. (O.k., I guess I'd better get back to work...).
[This message was edited by ejl on Thu 21 October 2004 at 15:18.]
Even if your bidding behavior is completely rational, the other bidders' may not be, as Justin's example illustrates. It's well-known that buyers will often rationalize a series of small incremental increases in the price of something they really want, even when they would not rationalize the sum of those increases if it's presented to them in one go. This is one of the irrationalities of buying behavior that eBay allows sellers to exploit.
quote:
Sealed bids is not the same. With a sealed bids auction, the higgest bidder pays what he actually bids, NOT just one increment more than the next higgest bidder.
No, it would be like a sealed-bid auction if everyone used off-site proxy bidding. The computers would just sort-out the highest opening bid in the final seconds.* Here's a paper describing why (including an amusing story of how eSnipe was sold on eBay):
http://www.economics.harvard.edu/~aroth/papers/eBay.ai.pdf
Some buyers have complained that sniping somehow harms eBay buyers. I think they're wrong; in fact, I now think that it's the non-snipers who are harming the rest of us. If everyone used off-site proxy bidding, I think final prices would fall (within the limits of the laws of price and supply, of course). Indeed, the whole used-goods market would be further rationalized. So the non-snipers like you, Patrick, are hurting the rest of us by unnecessarily increasing selling prices on eBay.
*Edit: thinking about it, this situation would be slightly better that sealed-bids, since the winner would pay at most only one bid increment above the second-placed bid, which would not always be their maximum bid. So you'd have the best of both bidding systems: the rationality of sealed-bid auctions (since everyone is bidding only their pre-auction determination of value) and the incremental wins of normal auctions. (O.k., I guess I'd better get back to work...).
[This message was edited by ejl on Thu 21 October 2004 at 15:18.]
Patrick,
You didn't read my edit (the '*' that came after the word "seconds." in the sentence you quoted -- see it?), where I acknowledge just your point about sealed bids. You're right about that, wrong about the rest.
As far as your other remark goes, if you look at eBay from the standpoint of an economic phenomenon, it may be in all of our interests to see second-hand prices rationalized as much as possible, quite independently of whether or not we use eBay or bid against one another. One way in which a rationalized second-hand market helps is that it pressures manufacuturers to keep their RRPs in line. Naim, e.g., couldn't hope to raise their RRP on a CDX2 model if a reasonably rational second-hand market insured that you could buy a fresh one for vastly less than the current price. Alternatively, higher second-hand prices would work in their favor. If the second-hand market is plagued by irrationality, it's a less reliable guide to pricing for manufacturers.
You didn't read my edit (the '*' that came after the word "seconds." in the sentence you quoted -- see it?), where I acknowledge just your point about sealed bids. You're right about that, wrong about the rest.
As far as your other remark goes, if you look at eBay from the standpoint of an economic phenomenon, it may be in all of our interests to see second-hand prices rationalized as much as possible, quite independently of whether or not we use eBay or bid against one another. One way in which a rationalized second-hand market helps is that it pressures manufacuturers to keep their RRPs in line. Naim, e.g., couldn't hope to raise their RRP on a CDX2 model if a reasonably rational second-hand market insured that you could buy a fresh one for vastly less than the current price. Alternatively, higher second-hand prices would work in their favor. If the second-hand market is plagued by irrationality, it's a less reliable guide to pricing for manufacturers.