I think you need to read the entire thread.
I’m not sure exactly how this is analogous to ebay. But it would be more analogous if the other store was selling an item and had the price tag of “at least $7.00 but no higher than $40” and it was the only store in town. Will you agree to buy it or not? Would your answer change if the sign read “at least $27.00 but no higher than $40”, and would your answer be any different if it just had a price tag of $40.
I also think you also may be unconsciously confusing the ebay dynamic with the more standard form of haggling such as when you are buying a car. In that case giving your final bid early on is a very bad strategy. But the E-bay dynamic is completely different.
It’s not analogous to eBay. Nor did I claim it was.
Not every point here needs to be a direct metaphor for it to nonetheless be making a relevant point.
The point being?
There’s definitely a parallel there. But the reason people can’t revalue the item is NOT from the sniping. It’s because ebay doesn’t tell you what the other guy bids. As I’ve repeatedly stated, the only information you gain from competitors in an ebay auction is that they may be willing to pay more than your specified amount. If sniping is somehow “unfair” it must be because you should be allowed to act on that information and are not. But assuming some sort of “rational” behavior, I don’t see how that information helps you at all.
I would appreciate a response from Mijin here as I think this is the third time I’ve explicitly described this with no feedback yet.
I have not been deliberately ignoring you, I’ve just had my hands full responding to other posters.
OTOH, you could see it as karma: you ignored me several times when I explicitly said I did not want to talk about alternative bidding systems. 
In answer to your point though, I’m not sure what I’d add above my response in Post #200
I snip for two reasons:
- To keep the bid from getting pumped up by emotional bidders.
- To keep me from being an emotional bidder. I try to determine what I’m willing to pay and put it in at the last second. If I don’t win then it’s too late to try to increase my bid. Sometimes it can seem madding to lose a bid by just a few cents and it’s hard to keep from creeping up my max.
You may be confusing me with someone else, since I only have made 5 posts in this thread and your only response to me was #200.
I won’t push the point past this, but that post has no response to the points I’ve been making. Let me take a step back and repeat what I think your thesis is. You have claimed a buyer can act rationally and still in some way be “hurt” by an ebay sniper. The only way this makes sense if if the snipe bid somehow gives you information you didn’t have before to reevaluate what your first bid was. But I’ve explained several times now why that isn’t true.
The only thing being sniped tells you is that someone is willing to pay something more. How does this knowledge help you revalue your bid when you can easily imagine it happening and observe your reaction before you even place your bid? If you only want to respond to one thing, please think about and answer that question.
You are not at all addressing that point in post #200. The point was: If you see somebody outbid you on eBay, does that give you any relevant information you did not have before, and if yes, which information?
What you suggest in post #200 is the following:
This is a fallacy; the time you have already invested in the current transaction are sunk costs - you cannot recover them, irrespective of whether you get the item or not. Once the time has been spent, the time is out of the game and cannot be affected by the decisions you take for the future. Therefore, they shouldn’t be considered in the decision-making process.
I can see the point that emotionally, you might be inclined to say: “I’ve spent so much time already searching for this auction and bidding now I want to get the item; I’ll up my bid by just two bucks - and not a penny more! - so the effort was not in vain.” But that is not rational; it’s the same kind of fallacy a poker player is victim to if he calls a raise with a hopeless hand simply because he’s “put in so much already”.
Post #200 doesn’t answer the key question at all.
If you truly comprehend the hidden proxy system as you keep insisting you do, you cannot say that the price went up by a trivial amount. You do not know how much the price went up. The price actually went up by the 2nd highest max proxy bid which you can’t see.
This difference you call a “trivial amount” is an artifact of ebay’s bid increment algorithm. It’s not a meaningful number to help determine your next counteroffer. This “trivial” amount is ebay’s number and not the competitor’s number. You’re shadow boxing and not even realizing it.
You see the price inch up by an increment (ebay’s algorithm) and you’d like to manually respond to this price. In the best case, the time it takes to do this is your reaction time (200 milliseconds) + network time to submit a new bid (let’s optimistically say 2 seconds). Ebay then “responds” to your counter offer in nanoseconds with its incremental bid algorithm. Now you have a new meaningless number to manually respond to.
You make your offers at speeds of 2 seconds and ebay makes its offers at nanosecond speeds. What new information did you gain while ebay was “thinking” for a few nanoseconds? And why are setting your bids in mathematical relation to this ebay algorithm instead of reasonably guessing what the bidders’ hidden max proxy bid might be?
Again, if you truly understand the proxy bid system, the cause & effect as you’ve stated is not true. You won’t pay over the odds in all your auctions.
You’re still demonstrating a misunderstanding of the proxy bid system. If you want to convince people that you understand it, you have to at least make statements that don’t contradict it.
It was actually a bit of genius on the part of eBay to display the current bid that way. It truly leads otherwise intelligent people to believe that they are likely to lose the auction by only a small amount, while the actual competing offer is still unknown, and encourages those who react emotionally to keep increasing their offer.
You will always lose an auction by only one bid increment, just as you will always only win an auction by one bid increment, regardless of how much more was placed as the highest bid.
Ah, my apologies.
As you see, I’m writing a lot of responses to a lot of people and I did indeed confuse you with someone else.
The new information is of course that my bid is insufficient to purchase the item.
I didn’t know that before, and indeed as the auction end time approached, my confidence that my bid was sufficient increased.
This is the point many seem to be making. Yes a sniper could come way over the top of your bid. Then again, maybe he didn’t. You can’t assume either way.
Perhaps you’ve forgotten what U was?
U is the point at which the price is still less than the value of the item to me – just. It’s a point at which I very reluctantly buy. If I went out on a shopping trip, and I bought everything I needed but had to pay U in every case, I’d feel like I had a terrible shopping trip.
If I bid U in a proxy bidding system (or indeed, any bidding system I’m aware of), I risk paying U. Simple as.
The fact that someone else thinks a given item is worth more does not affect my perceived value of that item. I bid what I feel it is worth, if no one else thinks it is worth that much I win, if someone feels it is worth more then they are welcome to have it.
I cannot comprehend bidding *just enough * to beat the *current *second-place bidder, which is what you seem to be advocating. If I am mistaken, please correct me.
I bid for a win and if I am lucky I get a bargain. You seem to bid for a bargain and hope for a win. I get what I want for the price I am willing to pay or less, you seem to miss out on items because you don’t want to risk paying what they are worth to you.
Perhaps you’ve forgotten there was a gap between the 2nd highest bidder’s amount and U?
But that’s not how ebay determines the price you pay.
“risk paying U” does not mean “every and all.” Are you using “every” and “all” as a mathematical statement of fact or as hyperbole?
Semantics. We’re using 2 different meanings of “new information”.
Let’s say your U is $50. In that case, you might consider $16 a bargain price.
7:59:59 – What information do you know here that helps you determine a numerical amount that’s a great bargain value?
8:00:00 – $15.00 Mijin (boolean information of I’m winning-vs-losing)
8:55:00 – $15.50 sniper (boolean information of I’m winning-vs-losing)
8:56:00 – $16.00 Mijin (boolean information of I’m winning-vs-losing)
8:59:59 – What new information do you know here that helps you determine a numerical amount that’s a great bargain value?
9:00:00 – $16.00 Mijin is the winner
According to the timeline, you could have placed the $16.00 bid at 8:00:00. The information you have in your brain about the ultimate number of $16 (not the painful max of U but of $16) is already in your brain at 8:00:00. You do not have to wait for all the noise happening between 8:00 and 9:00 to lock in how you feel about $16.00.
All the intermediate boolean values of Winning-vs-Losing in relation to that final $16.00 you submitted is academic trivia. I guess this is “new information” but only in the most insignificant sense of the phrase. That’s like saying the new bid value you see is an even number and happens to match a phone number you had as a child. The key is that there is no new information in relation to your subjective feeling about $16.00. To place any weight on those intermediate and indeterminate boolean micro victories of Winning-vs-Losing is irrational.
How do you not risk bidding U by manually bidding? Is it just that you expect to walk away from the auction before getting to U?
If this is the case, I would suggest bidding W instead of U. Insert a proxy bid at your walk away price, and ignore whatever U is. If someone bids a price over W, then you’re not angry, because it was over your walk away price. If someone bids below W, then eBay will happily increase your bid automatically, without going over W.
We’re talking relevant information here, not just any new information. In what way is the information that your bid is insufficient relevant to your subjective valuation of the item?
This information is - as has been pointed out by others, but must not be forgotten - binary: You don’t learn how much others think the item is worth; when you’re the leading bidder in an eBay auction and you’re outbid by someone else, the new “highest bid” displayed by eBay will always and necessarily be your bid plus one increment. Thus, you don’t get any numerical information about the valuation by the other bidder; you will simply get a simple yes/no information that somebody is valuating the item higher than you. Why should this affect your subjective assessment?
Let me try to explain what I’m saying one last time.
I’m convinced that if you read this with an open mind you’ll appreciate that my point is a simple one, and isn’t specific to sniping. However, it does follow from my point that rational bidders can be sniped.
U
We’ll begin from U, since most posters seem happy with this concept.
U is the upper bound price. Any more than U, I walk away without hesitation.
An item priced exactly at U, I may buy with extreme reluctance. e.g. If the cheapest I can find screws is U, I’d probably look at how much nails cost, how much adhesives cost, whether I could fashion my own screws before saying “Dammit, I really need screws, I’ll pay f-ing U!”
Buying strategy
So, let’s say I need to buy some items. One strategy might be to walk into some shops and whenever I see something priced less than U, I buy. We’ll call this the do_or_die strategy.
Alternatively, consider the person who refuses a price of $40 to compare prices, before finding that $40 is the cheapest price available, so they go back and buy at that price.
Clearly the item is worth more than $40 to them, yet they did not do_or_die. They refused a deal that was less than U.
The advantage of do_or_die is that it does not risk wasting time trying to find a better price than U and finding that one has to pay U anyway.
The advantage of waiting strategies is that they lessen the risk of paying U for all items (do_or_die may pay U for everything where it was unnecessary).
Neither is necessarily more rational, it depends on a number of factors and preferences.
Auctions
So, instead of shopping for, say, 10 items, let’s say I’m bidding on 10 items.
Do I bid U for everything? Maybe, but that is directly equivalent to do_or_die. In the worst case, I pay U for everything.
More likely, I do the equivalent of a waiting strategy, and risk being outbid by a price that is actually below U.
If the U is $70, you can defend the practice of bidding $50, say. I’m investing time in trying to get a good deal, and lessening my risk.
If you’re still with me at this point, then the argument is over: Rational bidders can be outbid by a bid less than U, sniping is just a particular flavour of bidding, so rational bidders can be sniped.
Sniping
The factor that is specific to sniping however is that it gives no opportunity for response. Why should that matter?
Well, say my strategy is to pay up to what I believe is the average price. I have bid $1500. Then I see I am outbid by $1502. To me, that’s still the average price since I don’t know average price to that precision.
If I were in a shop and (legitimately) the price went up by $2 I might say “Sure, that’s still about average price, OK I’ll buy”.
On eBay, I might try bidding $1504. However, if I’m still outbid on that I might declare the price has gone beyond my strategic level and walk away (the price may still be less than U however).
In the sniping case, I don’t have that option. I wanted to pay average price, and I potentially got outbid by a price that is still approximately average.
That’s all.
This is clearly not true under eBay’s scheme. Your definition of U aside, when you win an auction at eBay you will hardly ever pay the price you bid. This is because you win an auction by being the highest bidder, but you’re not going to pay your bid - you’re paying the second-highest bid plus increment. Of course, this may happen to be your maximum bid (if the second-highest bid equals yours minus increment), but this will be the case only exceptionally - and even if it happens, the rational bidder is not complaining since U is a price equal to what the item is worth to him. For reasons explained already in this thread, it is in the rational bidder’s interest to set his bid equal t what the item is worth to him, since this maximises his chances of getting the item for less than his subjective valuation of it wjile eliminating the risk of being overcharged.
That relates to your fallacious statement made above that it is not in the rational bidder’s interest to bid U, and is therefore not true. If you bid U, you cannot be outbid by <U since it takes a bid higher than yours to outbid you. That’s the point of an auction: Highest bidder wins.
I do follow what you are saying and basically agree with the first 3 sections. But frankly, they are pretty much irrelevant. This thread is talking very specifically about ebay and all this discussion (not just from you) talking about worth to you, what you pay in a RL store, L, V, U, etc… is all nothing but distraction. The only number that should matter is, in the context of the auction, what you are willing to pay. This is what I’ve been referring to as U, because I thought it was what you were willing to pay if it was a traditional auction style where you could respond to other bids. From your last post though, it is clear you were thinking of U as some esoteric maximum-payment-for-value number. No such obfuscation is necessary. I would think it is relatively easy to just look at a specific auction and say ‘I would pay X for that’, end of story.
And then the sniping aspect. You very nicely illustrated our points here by having a hypothetical auction where you imagined changing your bid, without this being a response to a bid in a real auction. Why can’t you do this exact same process before you place your bid in the first place?
And finally, you are still confusing the mechanics of the proxy bidding system. No one is disputing that the price you would be willing to pay is very undetermined and most people might gladly add on a few bucks to secure a win. But remember, ebay isn’t telling you that the price only went up a few dollars. When you have the desire to increase your bid by a few bucks more, what you are doing is gambling with zero information that the other guy is only a few bucks ahead of you.
Do you still think that’s a rational desire? Do you not think the same result would happen if you imagine being outbid in your mind before you place the bid in the first place? You just gave us a hypothetical auction involving adjusting bid amounts without an actual auction taking place so clearly it’s possible.
Yep. You also potentially got outbid by only a few bucks when a guy outbids you days before the auction close and you decide not to raise because you’re high enough already and you don’t know how much higher he is.
You see how this scenario is identical to the sniping case in terms of rational behavior? Because ebay hides the true bid amounts, there’s bound to be disappointment sometimes when you find out you lost by only $.50. But what could you have done differently at the time?
I’m with you up until this point
The savvy bidder is not going to bid $1500 and wait for the auction to end, they’ll bid $1504. If you bid $1504, then the guy who snipes @ $1502 isn’t going to win, only the guy who bids $1506 will. If you lose to a bid of $1506, you have already decided that you’d walk away and not pay any more, so you wouldn’t be upset about not having a chance to respond.
It’s the person who bids $1500 and loses who gets upset at not getting a response bid. However, that person has not given himself any positive value by withholding his bid of $1504, he would only pay the higher price if there is another bid above $1500, and would never pay a price higher than $1504 in any case. By withholding the bid of $1504, he’s given other buyers a chance to sneak in under his walk away price and take the item.