Hacks 1917 Industrial.. Strength Tips and Tools [Electronic resources] نسخه متنی

3.1 Hacks #20-32

The
term "auction" evokes a vivid image
in most people's minds: a fast-talking auctioneer at
a podium, dozens of seated participants, and an assistant parading
numbered collectibles across the stage, one by one, as the
participants place their bids. The auctioneer quotes an opening
price, and participants signal their interest by raising their hands,
at which point the bid price is raised by some arbitrary amount.
Bidding for each item continues until the current bid price exceeds
the amount all but one of the participants is willing to pay.

eBay's bidding system works a little differently.
For one, auctions are timed, and close at a predetermined date and
time, regardless of the bid price or whether or not everyone has
finished bidding.

Secondly, eBay uses something called
"Proxy Bidding," a
system that somewhat compensates for the fact that the auctions are
timed. Instead of placing individual bids on an item, you simply
specify a single "maximum bid," and
eBay does the rest. Imagine sending someone else to an auction for
you, giving them a certain amount of money to bid on a single item.
That person, the proxy, would place traditional
bids until he wins the auction or runs out of money.

Finally, eBay offers
"fixed-price" listings,
allowing buyers and sellers to skip the bidding process and complete
the deal with a single purchase, as though eBay were just another
online store. Furthermore, the
"Buy-It-Now" feature
allows sellers to turn their auctions into a hybrid of sorts,
permitting either ordinary bidding or a single purchase. (See [Hack #26] for more information.) Factoid:
About 24% of all listings on eBay end with a Buy-It-Now or
fixed-price purchase.

3.1.1 Proxy Bidding

The best way to understand proxy
bidding is to see it in action.

A seller starts an auction for an antique pocket watch, and sets an
opening bid of $25.00. The duration of the auction is five days;
since the auction started at 3:52 P.M. on a Thursday, it is scheduled
to end at 3:52 P.M. the following Tuesday. Here's
how bidding might proceed:

Here, a total of five bidders placed a total of five bids, and the
final price ended up at $1.00 more than the second-highest bid. See
[Hack #25] for details on the $1.00
increment shown here.

In any auction with more than one bidder, the final value is always in the neighborhood of what at least two bidders are willing to pay for the item.

The problem with proxy bidding is that bidders are human, and as
such, the excitement of winning can cloud their judgment.
Furthermore, many bidders still think and bid in
conventional terms. The next example paints a somewhat more realistic
picture of how bidding works, using the same auction as the previous
example.

Two important things happened in this second example. First, a
bidding
war took place between Bidder 1 and Bidder 2. Between them, they
placed seven bids, but neither won the auction. It
would've been much less trouble if each had simply
decided how much he or she was willing to spend and then stuck to it.

The beauty of proxy bidding is that it also accommodates conventional bidding, allowing bidders to enter a single bid or a maximum bid with equal ease. But true proxy bidding is the better choice, because it enforces the concept of picking a maximum and sticking to it.

Second, Bidder 3 saw this war and decided to stay out of it. Instead,
she waited until about three minutes before the end of the auction,
and then placed her maximum bid. Since there wasn't
enough time for Bidder 1 to be notified that she had been outbid, she
never bid higher, and ended up losing the auction. Not only did
waiting ensure a win for Bidder 3, it avoided further bidding wars,
which ultimately resulted in a lower final price. This is called
sniping, and is discussed in [Hack #21].

It's important to point out that sniping
doesn't guarantee a win. Quite the contrary, in
fact: had either Bidder 1 or Bidder 2 entered a bid higher than $50,
either would've won the auction, regardless of
Bidder 3's bid. And I'm sure that
at least one of the early bidders returned after the auction ended
and thought "I would've been
willing to pay more than that!"