Ok, but once again, this is not ebay. In the ebay model, if you respond to an outbid, you aren’t responding to a “trivial” price increase. You’re responding to the knowledge that someone out there is willing to pay more, and you have no idea how much. How does this information help you if you are, in fact, afforded a chance to respond?
But aren’t you willing to go up to U anyways, just one manual bid at a time? The worst cases for both situations is the same.
Basically, ebay allows you to make a rational decision entirely separate of what happens in the auction. Just imagine a fortune teller sitting next to you; you say a bid amount and she says it will lose (and that’s all the information you can get during the auction). When you reach the point where you say screw it, no higher, that’s your bid amount. It’s not rational to do the exact same thing during the auction and complain when some guy stops you 10 steps before your max by taking away your chance to respond to his outbid.
At the risk of irking people, because this does repeat information already described, and in fact is a theme of the thread, sniping does tend to stop the second scenario from occurring, and that is the only reason to snipe.
In your first scenario, the sniper simply bids a maximum that is higher than than anyone else’s maximum. The fact that he does it near the deadline doesn’t change the fact that he’s willing to pay more than anyone else has offered.
In your second scenario, bidders have put in bids that are not truly the maximum amount they are willing to pay. They think they are willing to pay $5 so they put that in as their max. Then you bid a $10 max, which posts as (say) a $5.25 bid. When they see you outbid them, they think, “Someone else wants this, it must be worth more. I’ll raise my bid.” Then they raise their bid until they either give up, or they outbid you. Now the item sells for $10 instead of $5.25. Same bidders, it’s just that putting in an early high bid can cause other bidders to reevaluate their maximum bid on the fly.
Consider it this way
There are three types of bidder.
The normal bidder enters the maximum amount that they are willing to pay.
The sniper bids what they are willing to pay as late as possible.
The irrational bidder does not understand how the auction system works, he bids incrementally, and raises his bid when someone else outbids him, he may or may not be present at the end of the auction, he may also not have a clear idea of how much he is willing to pay.
The sniper has no advantage over the normal bidder, but is at no disadvantage (other than the cost of a sniping service, or the effort of being online at the end of the auction). The sniper has an advantage over the irrational bidder who will have no, or very limited opportunity to raise his bid when the sniper bids with a few seconds remaining.
The normal bidder has an advantage over the irrational bidder, however the irrational bidders actions may result in an increase in the price that the normal bidder will pay, as the irrational bidder will tend to keep bidding until he has reach the maximum amount that he is willing to pay. The irrational bidder may also get so caught up in bidding that he will pay more than he originally intended.
The irrational bidder is at a greater disadvantage when bidding against a sniper.
The rationality of sniping behaviour is therefore dependant on weighing the prevalence of irrational bidders vs the financial or effort cost involved in the sniping.
The sniping behaviour is advantageous only because of the irrational bidders, but both the normal and sniper bidders would be disadvantaged if the irrational bidder start bidding in a normal fashion.
Only rubes can get sniped by a bid lower than they were really willing to pay. A rational non-sniper may lose to snipers at the last minute, but always at a price higher than their walk-away number.
Again, you neglect the fact that it only looks like the price went up a trivial amount. Most likely, your opponent is bidding a few units higher than you. If they don’t snipe, you’ll just drive up the price they ultimately pay or you’ll end up overpaying your own maximum and they don’t get the item. If they do snipe, they don’t give you a chance to screw it up for both of you.
BTW, FWIW -
I snipe.
I do it because in an “irrational” auction, it’s a good way to get the item at a reasonable price. However, I always snipe with my maximum bid at the last instant. So, if the current price is $15 with 30 seconds to go, I’ll bid $51.53 at 5 seconds to close. If I lose, then I lose, but I never pay more than I’m willing to. Using this strategy works against emotional bidders who aren’t sure what something is worth to them, and bid in small increments.
Just to clarify the apparent discrepancy here: What I meant when I said that nobody ever said anything “to that effect” was that nobody ever claimed the “maximum bid” advocates would buy an item at the first place to be below the purchaser’s subjective value. Obviously, you’d want to get it as cheap as possible, so there is still space for shopping around for cheaper alternatives.
Dr Fidelius’s post, OTOH, is based on the word “potentially” in your post to which he replied. Yes, you would potentially buy from the first place below your maximum bid - potentially in the sense that the paramount criterion (price offered does not exceed subjective maximum) is met. But you wouldn’t necessarily buy from that first place - depending on circumstances, it might be worthwhile to shop around for alternatives that are cheaper than the first place, even where the first place already was below maximum. Nobody ever said otherwise.
Precisely. And in all these cases, you get stuff for less money than what it’s worth to you. Pretty good deals, in fact, and not at all a “worst case.”
Here you’re conflating “less money than what it’s worth to you” with “good deal”.
If I buy an item for $40, and then later see another store selling an identical item for $7, then I would feel that I got a bad deal.
And, even though I must feel that the item was worth more than $40 to me, or I wouldn’t have bought it, we can call it a worst case if it turned out that that was the most expensive retailer in town*.
Anyway, I think I’d better bow out here, because my defence of the rational sniper victim, is based on quite an abstract idea (far more broad than sniping or even auctions) and people are having to follow me on my tangent to argue with me, which few seem willing to do.
I guess I’m going to have to leave it at that. I believe that rational bidders can be sniped, and everyone else thinks I’m an emotional eBayer who doesn’t understand proxy bidding
Of course, on the face of it, the obvious worst case is not having the item at all. But here the analogy gets complicated because it rather depends on how the agent behaves. If the agent seeks a better deal, they’ll find it. If they choose to just do without the item, that implies it has little value to them and therefore isn’t a worst case.
Perhaps you are using a different definition of “sniping” than anyone else here. Of course a rational bidder can be sniped, all that has to happen is that the sniper enters a last-minute bid that is higher than the rational bidder’s offer.
You seem to feel that sniping is some sort of malicious act, or that people who put their actual maximum acceptable price in as an offer (the “rational bidders”) believe that they are immune to a last-second bid. This is not the case, and rational bidders get “sniped” just as often as emotional bidders.
We just don’t carry on about how unfair it is, since we recognize how the eBay auction format is designed to work, and can appreciate that someone else may be willing to pay more for a given widget than we are. That is the “rational” part; we determine our acceptable price, and do not change our subjective valuation of this item based on what others do. (Of course, we are capable of learning, and if we are consistently overbid then we can adjust our subjective values for the next auction.)
No, this is not necessarily the worst case. If your subjective valuation of the item is $20, then not having it is preferable to paying >$20 for it..
Of course, sniping is a good strategy if your paramount objective is simply to get the item. In this case, sniping in the last second is a good strategy - it doesn’t give others the chance to outbid your last bid. But the rational bidder doesn’t participate in an auction with the objective to get the widget, whatever the cost - he wants to get something for less than it’s worth to him. If he’s outbid by someone who can bid more because the other guy’s subjective valuation is higher than his - well, that’s fine for the rational bidder.
No.
No more than queuing overnight to be first when a store opens for a sale is malicious.
That does not mean however that it is not a loophole that eBay should not cover.
No, that’s the position I’m arguing against.
Most of the posters here apparently snipe, but are insistent that only rubes are vulnerable to the practice.
“Only DUMB people can get sniped. You’re not dumb, are you?”
Again, no.
My model is about defining this acceptable price, and auction strategy. As I said, it’s a market reality that is more broad than auctions, but sniping takes advantage of it.
I’m emphatically not describing the emotional case of someone saying “No way am I gonna pay more than $17 for that…hey wha…? Highest bid $17.25?? Oh no you don’t Mister, I’m gonna bid $17.50!
But no way am I gonna pay more…” etc
I obviously meant the worst case among the set of potential outcomes here. The transaction you’re describing won’t happen.
If we’re going to allow that transaction as the worst case, then there is an even worse case, where the agent burns all his money and possessions.
For the record, it’s this whole “worth to him” and what he should therefore bid that my model was expanding on. I’m saying “for the record” because at this point I’ve given up trying to explain it here.
I am trying to formalize the concept however, and I’m also going to write a small program to test the model.
I have no grasp of any deep economic strategies. All I can talk about is how the auction-style market of eBay works, and what strategies are effective within the rules of that venue. I cannot speak to any wider concepts.
From what I saw, the remarks were more against complaining about being sniped, than about who loses auctions to a last-second bid. We wil all lose to whomever makes the highest offer, regardless of when the offer is placed. Again, I believe you are personalizing this discussion too much, and are reacting emotionally to statements about eBay betting strategies.
Everyone can get sniped. That is indisputable. I think what people are saying though is that only irrational people complain about being sniped.
I understand your point about the evaluation of an object worth being far more complicated than just saying you’d be willing to pay X for that. Certainly there are many factors and you are unlikely to get good deals just by estimating what something is worth to you.
But all this is moot, because with the ebay system, nothing that happens during the auction helps a rational bidder adjust his ideal bid. The only possible benefit to responding to a sniper is to use the information that he/she is willing to pay more than you. But since you don’t know how much more, you could have easily addressed the situation in your head before it happened. Perhaps you think having the knowledge that someone is willing to pay more does help you adjust your ideal bid, in which case I would love to hear how and why it doesn’t work to just imagine the same situation before your bid.
The question is, what does being “vulnerable to sniping” mean?
If someone bids at the closing time of an auction, that affects everyone who participated in the auction equally, all are “vulnerable” to this.
However, the only person who is harmed in any definable way is the person who let the auction close without telling the auctioneer what their maximum bid was. That’s the part that is getting labeled dumb. At least, the part where they complain about not winning the auction, while knowing full well that they never told the auctioneer they were willing to pay more.
Last bid does not win. Highest bid wins, whether that bid was placed in the first or the last minute of the auction.
If you feel that something is worth $100, and place a $100 bid on day one, you may be leading the auction with a current bid of $25 until day seven (if the next highest bidder has only bid $24). A sniper who comes in and bid $75 in the last two seconds will ose to you, although thier bid will force your winning bid up to $76.
If they bid $100 in a snipe, they would lose because ties go to the first bidder of the amount.
If they bid $120 in the last two seconds, they would win for $101.
An eBay bidder can bid for a bargain and hope for a win, or bid for a win and hope for a bargain.
(The phrase “vulverable to sniping” indicates a very emotional approach to a purchase.)
I’ve never used sniping tools, although I’ve done approximately the same thing manually. Here’s how I look at it:
Let’s say there’s an item you’re interested in. It’s worth $50 to you. The current bid shows as $20. You don’t know this yet, but the current top bidder actually bid $40, and it’s only showing what’s necessary to win.
My traditional approach: Bid $50. It shows me as high bidder with $40.50. Check back when it closes to see if I won.
If I used sniping tools: Bid $50. It still shows the other guy as high bidder with $20. Check back when it closes to see if I won.
The third approach: Bid $25. It shows the other guy as high bidder with $25.50. Bit $30. It shows the other guy as high bidder with $30.50. Bid $35. It shows the other guy as high bidder with $35.50…
People in this thread have talked about “rational” and “irrational” bidders, as if they are two distinct classes. In fact, most of us have a mixture of rationality and irrationality when it comes to valuing things, and one factor in the mix is how much others value things.
I’ve watched, and even taken part in, real-life auctions for real estate, and there’s a psychological element in those, just as there is in eBay auctions. One part is that, if you’re bidding in a competitive auction (i.e., one with two or more serious bidders in the auction), you don’t want to bid too fast or too eagerly. That’s because, if you do, others will decide that the value of the real estate is higher, and so might up the limit of their bid. You bid as slowly as possible, as if each bid is very close to your limit, even if you’d be happy to go 25% higher.
Bidding slowly in a real-life auction is the equivalent of sniping in an eBay auction because, in each case, other bidders can’t revalue the item based on how much you are willing to pay. They can only base it on how much they want it pay (and on how much similar items are sold for in other marketplaces). That’s why sniping works, and why people who truly are “rational bidders” should not care at all about being sniped.
Don’t hate on us “snipers”. I had to turn into a sniper because I continued to lose bids all the time. I would think I had an awesome bid and nobody would up the bid an they didn’t, until I would get sniped in the last few seconds when I wasn’t paying attention.
