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The online auction with hard bid window is perfectly fine. Rationally, everyone bids their reserve price immediately at any time during the window. The current

by lotyrin 11y ago

The online auction with hard bid window is perfectly fine. Rationally, everyone bids their reserve price immediately at any time during the window. The current winning bid (just above the second bidder) is displayed so you can avoid the effort of bidding if your reserve is too low to matter. I don't really understand the concept of "driving the price up" in online auctions. It only seems to represent a flawed understanding of cause and effect (the current price causes the future price) which only makes sense irrationally with effects such as anchoring or post-hoc rationalization of purchases. The price is whatever someone is willing to pay for it, if you lose a purchase by setting your reserve on the auction system to less than your true reserve - what you were willing to potentially pay or conversely, if you have won an auction for more than you would have liked - you have failed to act in your own best interest, there is not a middle ground between the two.

Yxven 11y ago
This argument assumes we can trust the auctioneer to only increase our bids fairly instead of gaming the system to maximize their profit (or at least short term profit). I don't think we live in a world where that's a reasonable assumption.
- lotyrin 11y ago
  It doesn't matter. If you set your reserve to what you're willing to pay, you cannot spend more than you are willing to pay. Then any sellers that shill bid above that level risk buying their own auctions and paying the auction house commission, can never gain more money than your reserve -- should have simply set their reserve to whatever the minimum they'll accept for the auction.
SixSigma 11y ago
While I agree in principle - I now just bid what I think and forget about it - if I bid $1.00 and you bid $1.02 you will win but really I was prepared to bid $1.04, so I have to overbid to avoid this margin. And then I'm at the next price break.
- lotyrin 11y ago
  You could have simply bid 1.25 or whatever your true reserve is in the first place. If your reserve price changes in the face of the current auction price you're not acting rationally.
  - SixSigma 11y ago
    If you knew it was going to go for 1.26 would you bid 1.27 ? The pain of losing affects your rationality.
  - dragonwriter 11y ago
    > You could have simply bid 1.25 or whatever your true reserve is in the first place. If your reserve price changes in the face of the current auction price you're not acting rationally. Well, sure, the rational choice model is a poor model for human behavior in general that is only even a reasonable approximation when aggregating over large groups, and even then only in certain kinds of interactions. People not acting rationally isn't some kind of exceptional failure mode, its the norm. In relevant particular, the rationality assumes -- falsely -- perfect, zero-cost knowledge of utilities and opportunity costs. In reality, understanding of the expected utility and opportunity cost of a transaction is always imperfect, and the degree to which it approximates perfection is dependent, to a certain extent, on the effort expended in considering the utilities and costs, which has its own opportunity cost. If you modify the rational choice model only enough to accommodate the fact that certainty of costs and utilities in the real world is dependent on effort which itself has an opportunity cost it then becomes easy to see how it is as rational as it is practical to be to revise ones estimate of value of a potential purchase in light of information that indicates that the safe (and cheap) estimate used in preparing a bid is not enough to secure a purchase, so further consideration is needed to determine if it is worth upping that bid or whether the purchase should be abandoned.

by lotyrin 11y ago

Yxven 11y ago

This argument assumes we can trust the auctioneer to only increase our bids fairly instead of gaming the system to maximize their profit (or at least short term profit). I don't think we live in a world where that's a reasonable assumption.

lotyrin 11y ago
It doesn't matter. If you set your reserve to what you're willing to pay, you cannot spend more than you are willing to pay. Then any sellers that shill bid above that level risk buying their own auctions and paying the auction house commission, can never gain more money than your reserve -- should have simply set their reserve to whatever the minimum they'll accept for the auction.

SixSigma 11y ago

While I agree in principle - I now just bid what I think and forget about it - if I bid $1.00 and you bid $1.02 you will win but really I was prepared to bid $1.04, so I have to overbid to avoid this margin. And then I'm at the next price break.

lotyrin 11y ago
You could have simply bid 1.25 or whatever your true reserve is in the first place. If your reserve price changes in the face of the current auction price you're not acting rationally.
- SixSigma 11y ago
  If you knew it was going to go for 1.26 would you bid 1.27 ? The pain of losing affects your rationality.
- dragonwriter 11y ago
  > You could have simply bid 1.25 or whatever your true reserve is in the first place. If your reserve price changes in the face of the current auction price you're not acting rationally. Well, sure, the rational choice model is a poor model for human behavior in general that is only even a reasonable approximation when aggregating over large groups, and even then only in certain kinds of interactions. People not acting rationally isn't some kind of exceptional failure mode, its the norm. In relevant particular, the rationality assumes -- falsely -- perfect, zero-cost knowledge of utilities and opportunity costs. In reality, understanding of the expected utility and opportunity cost of a transaction is always imperfect, and the degree to which it approximates perfection is dependent, to a certain extent, on the effort expended in considering the utilities and costs, which has its own opportunity cost. If you modify the rational choice model only enough to accommodate the fact that certainty of costs and utilities in the real world is dependent on effort which itself has an opportunity cost it then becomes easy to see how it is as rational as it is practical to be to revise ones estimate of value of a potential purchase in light of information that indicates that the safe (and cheap) estimate used in preparing a bid is not enough to secure a purchase, so further consideration is needed to determine if it is worth upping that bid or whether the purchase should be abandoned.