You and SlyFrog both missed the point. I do, indeed, bid exactly the maximum amount that I’m willing to pay, and I let the proxy software take it from there. If I think it’s worth $10, I’ll bid $10.
Most of the snipers I’ve talked to use the sniping software so that they don’t have to sit at their computers waiting for the last moment before auction close. They can have a life. An auction ends at 2:00 on Saturday and you’re planning on fishing all day? No problem. Set a snipe amount on Friday and don’t worry about it.
You set your snipe for $10 on Friday afternoon. I make an actual bid for $10 an hour later. If nobody goes higher than $10, I win. You lose. If it goes higher than $10, fine. Neither of us would have won it anyway.
I’m not saying proxy bidding is better than sniping. I’m saying that this particular case is a definite disadvantage to sniping that nobody else had mentioned.
This is, of course, how live auctions work - they stay open until there’s just one bidder left. Is there any reason why eBay doesn’t implement this? It seems as if it would work in their favor.
The chance of two people bidding exactly the same amount is pretty small. And you can minimize the chance by not bidding nice round numbers. In your example, if I think an item is worth $10, I’d bid, say, $10.33. If you’d bid $10.00, I’d win. If you bid $10.52 you’d win fair and square.
I read, I believe it was on eBay in a FAQ or one of their forums, that they’re afraid doing that would cause them to be considered a true auctioneer and, as such, subject to the same regulation that auctioneers are subject to, such as licensing.
That hasn’t stopped Yahoo from doing it on their auction site.
In the case where everyone is sniping “perfectly”, i.e. placing their bids at the last possible moment, the eBay system effectively becomes a Vickrey auction, in which everyone submits secret bids before a deadline, the winner is the highest bidder, but the price paid is the value of the second-highest bid. (Actually, in eBay’s case it would be the value of the second-highest bid plus the minimum bid increment, but this is a minor point.)
I have found myself doing this: For example, I bid on a box of Marathon bars on ebay, for 10 dollars. Guy comes in and bids 15. Instead of letting him have it, as there were three other auctions at 10 dollars and no bidders, we both end up having a bidding war that takes the price up to 27 dollars. I felt pretty stupid, but at the time it was “beat the guy” attitude rather than any logic.
I use this tactic when I am selling stuff. I rarely ever start a bid at a high value. If you start it at 1 cent, the people that bid on it tend to fight for it, causing the price to go up to 20 dollars, when I wouldn’t ever get a single bid if I started it at 10. I’ts an emotional investment, bidding. People like to protect their emotional investments even at the cost of a great value. I know there are obviously exceptions, but it works well enough that I can confidently say it is common.
That’s such a great idea I’m surprised they haven’t done it. A real-world auction doesn’t have a time limit. It ends after there are no more bids after a short elapsed time. “Going, going, gone!”