Why do people bid so early on ebay?

[bakup]

Why do people bid so early on ebay? I'm looking at an item that ends in a couple days and people are already having a bidding war on it. Are these people just bidding early in case they forget to bid later or do they just bid early to scare off other bidders. To me, it would be smart to only bid within minutes before the auction closes.

[UKDarkJedi]

you and me both.

Unfortunately some people have less sence than cents.

[MGS4-SS]

Its a way of scaring other eBayers off.

I too wait 'till the end of the auction, but if I see two people bidding after each other bids, then I would bid with more care.

[Shof]

Those people might be like me, work + college = does not give you the right time you need to baby an auction

[LunarFalcon]

I only bid in the last 2 minutes :p

[Sir Topham Hatt]

I have figured a way to bid in the last 30 seonds :p

[NoneAvail]

I always do this for some reason. I just don't want to end up paying a lot of money thats why I don't wait. But I always get outbid. W.e if you can find what you want for cheap then, you gotta bid for it, and if someone outbids you, ebay always emails you.

[LunarFalcon]

MrSpoon - you're probably the guy who keeps outbidding me! :D

[dreamz Veteran]

Those people might be like me, work + college = does not give you the right time you need to baby an auction

that would be rational if you weren't engaging in a bidding war. ebay accepts a bid and will incrementally increase the bid until it reaches the ceiling you specify. in this sense, if you won't be around when the auction ends, you should put in your valuation and then hope for the best. if your valuation is the highest at this point, the price will go up only incrementally; and if your valuation isn't the highest, you would have lost anyway.

now, a bidding war (by the same people) suggests that people are putting in successive bids, which is irrational. there's no reason to not put in your real valuation.

clearly, sniping (bidding at the last minute) is the best solution. you will do at least as well by bidding at the last minute as bidding at some other time. numerous economic papers have demonstrated that sniping is the optimal strategy.

as for the argument about scaring off other bidders, i don't think that's right. let's say you have a valuation v1 and another bidder has a valuation v2 (unknown to you). if you bid early, the price, p, will go up. however, if p < v2, bidder 2 isn't going to be scared off (unless there are lots of substitutes, but let's ignore this). he'll submit a bid of v2 at some point (maybe at the end) and you'll have to pay at least v2. but if p > v2, bidder 2 will be scared off, but since your valuation is higher than v2 (since you bumped the price up to p), you would have won in the end anyway. there's no point to bidding early.

more importantly, waiting until the end allows you to take advantage of the fact that not all bids will be received by the time the auction ends. hence, there will be some probability that your bid will be the highest by the end of the auction, even if it isn't necessarily the highest of all the potential bids.

[KeR]

I never understood it either, I mean what possible purpose does it serve to bid early besides the fact that the price gets pushed up?

[gigapixels Veteran]

I bid in the last 30 seconds! It always works (unless somebody has a max bid higher than me already in there).

[houlty]

I have figured a way to bid in the last 30 seonds :p

yeah, the best way it to wait til the last 30 seconds... :whistle:

[00000]

I think its just ignorant people who think they're actually going to get an item with 2+ days left on its listing at its current price

[PermaSt0ne]

gotta start sometime right?

if you wait till the last minute it'll just give more time for tons of people to become interested in the item, increasing the competition

people have a set limit of what they're gana spend, doesn't matter if it goes up to that limit quickly or slowly.

[Spielo]

This is how eBay works:

You see an item you want, and bid the maximum you're willing to pay for it. If you are willing to pay the most, you get the item, if not, you don't.

It shouldn't matter when you bid, as long as you bid the maximum you're willing to pay.

[dreamz Veteran]

gotta start sometime right?

if you wait till the last minute it'll just give more time for tons of people to become interested in the item, increasing the competition

people have a set limit of what they're gana spend, doesn't matter if it goes up to that limit quickly or slowly.

This is how eBay works:

You see an item you want, and bid the maximum you're willing to pay for it. If you are willing to pay the most, you get the item, if not, you don't.

It shouldn't matter when you bid, as long as you bid the maximum you're willing to pay.

that is incorrect. people do have a set limit. but waiting increases the chances of SAVING MORE.

think about it this way. if people bid early on, the price goes up immediately and with certainty. if people waited until the last minute, the price might go up just as much or it might not (e.g., some bids don't make it in time). but the second case will be at least as good as the first. why? if we have the same people bidding, the final price in the second case will be no higher than in the first, and it could be lower. where the final price is the same in the two cases, as a bidder, you should be indifferent between bidding early and bidding at the last minute. but if the final price is lower, you should bid at the last minute to save money.

given these two cases, bidding at the last minute is at least as good as bidding early (and better in some cases).

this is actually a popular topic in game theory. there are many papers on it, e.g., one by roth and ockenfels. just google 'ebay sniping' or 'ebay sniping game theory'.

[_bobcat_ Veteran]

I should think it is down to igorance on the part of the bidders. Plenty of people on there don't use their brain cells as much as they should.

Edited September 12, 2007 by Persephone

[bayrider]

I never understood it either, I mean what possible purpose does it serve to bid early besides the fact that the price gets pushed up?

Please explain me the difference:

1. Over a period of 7 days, 10 people people place in bids, thus driving up the price gradually.

2. Over a period of 7 days, nobody places a bid until the last 5mins where there are 10 people bidding against each other causing the price to go up.

There's absolutely no difference.

If you have a certain amount to spend and don't wish to purchase the item beyond that price, whether you bid on day 1 or 10 seconds left, it's the same thing. If you lose, so be it. It's out of the bidder's price range. That's how a lot of people look at auctions.

If you want to bid last minute, all you're doing is delaying the inevitable until the very last moment. The auction price might seem cheaper for the first 6days, 23hrs and 45mins of the auction, but the final price is most probably the same. and what's worse is that you might end up spending more than you wish, or more than that item is worth because you have engaged in a full out bidding war.

I've had cases where I was the seller, and there was virtually no interest in the item I was selling until the last 30mins where a cd for 9.99 sold for over $120.

[werdwerdus]

I think it makes sense NOT to bid early on, for the simple reason that you are not locked into that item; you have time to search around for a BETTER deal(s).

[sundayx Veteran]

I just bid early at the lowest available price so other people have less incentive to bid in that auction. If someone enters, I'd test out the waters first, see if he has a high 'highest bid', if so, I usually tend to bid in the end 10 minutes with my highest bid, if it extends beyond what I can afford, I usually let it go, unless it's a rare item.

[HoochieMamma]

yeah, the best way it to wait til the last 30 seconds... :whistle:

More like the last 5-10 seconds. Woot for ebay sniping programs.

[Colin-uk Veteran]

I used to bid early on when i frst joined ebay.

Then i quickly realised i wasnt going to get that brand new sony laptop for 0.99p :p

Now when bidding, I have a system that lets me bid in the last 10 seconds, no sniping program needed ;)

[CloudEngineer]

i usually wait last minute to bid

that or "buy it now" (if available with the item or another seller's item) if i can't be bothered waiting 6 days for an auction to end :)

[dreamz Veteran]

Please explain me the difference:

1. Over a period of 7 days, 10 people people place in bids, thus driving up the price gradually.

2. Over a period of 7 days, nobody places a bid until the last 5mins where there are 10 people bidding against each other causing the price to go up.

There's absolutely no difference.

If you have a certain amount to spend and don't wish to purchase the item beyond that price, whether you bid on day 1 or 10 seconds left, it's the same thing. If you lose, so be it. It's out of the bidder's price range. That's how a lot of people look at auctions.

If you want to bid last minute, all you're doing is delaying the inevitable until the very last moment. The auction price might seem cheaper for the first 6days, 23hrs and 45mins of the auction, but the final price is most probably the same. and what's worse is that you might end up spending more than you wish, or more than that item is worth because you have engaged in a full out bidding war.

I've had cases where I was the seller, and there was virtually no interest in the item I was selling until the last 30mins where a cd for 9.99 sold for over $120.

i already gave one reason, but there are many others.

here's an article:

On eBay, it pays to snipe

Thank goodness for science. How else would we know the best way to nab those barely-used weed whackers, dumbbells or duck-shape salt shakers on eBay? In a study that gives the lie to the notion that eggheads don't like to eyeball online auctions like normal folks, a study by South Korean physicists confirms via some elaborate mathematical modeling that "sniping" ? waiting for the very last second to submit your bid on that Elvis-shape throw rug ? is indeed "a rational and effective strategy to win in an eBay auction."

Founded in 1995, eBay is the king of online auction sites. Sellers put up items for sale and buyers bid up the price. Thanks to the Internet's lack of state sales tax and the public's thirst for other people's garage sale items, the company has grown into a firm that amassed $4.55 billion in revenue last year. The service sets a deadline on bids for items, which has given rise to the practice of "sniping," bidding at the last minute to deny other bidders time to outbid you.

Savvy buyers have taken to the practice in swarms. Some companies even exist to snipe for ySellers, however, have grumbled that the practice keeps winning bid prices lower than they would be in a more open-ended auction, in which prices may be driven up by competition between buyers. If nobody bids until the last second, it's inevitably just a (relatively) low-bidding person who puts in the highest-price bid and walks away with the item.

To test whether sniping is a smart way to do things or just truncates normal bidding, the South Korean team at Seoul National University produced a "master equation" for how bidding proceeds (it's nk(t+1) ? nk(t) = w(k-1)(t)*n(k-1)(t) ? wk(t)*nk(t) + sigma(k,1)*u(t), if you really want to know), and then tested it against a massive number of auction records, some 264,073 items sold in one day on eBay and another 287,018 items sold in one year by eBay's Korean partner.

Plugging all those data into the model and testing the outcome in terms of how the auctions turned out, the team found that the probability of submitting a winning bid on an item indeed drops with ea"Our analysis explicitly shows that the winning strategy is to bid at the last moment as the first attempt rather than incremental bidding from the start."uot; The study appears in the current Physical Review E journal.

The finding is no surprise to Harvard economist Alvin Roth, who has studied sniping from an economics viewpoint since 2002 with colleague Axel Ockenfels of Germany's University of Cologne. They came to similar conclusions. "I think you might do the most good if you advise bidders to form an opinion of how much they are willing to pay for an item, so that they don't get caught up in a bidding war and pay more than they will be happy with," says Roth, by "But, that being said, if they know what proxy bid they want to submit, it won't hurt them to submit it very near the end (but neither will it help them much, or often ...) So, sniping is a good strategy, for those with the time to do it," he adds.dds.

A statement on the eBay site says: Sniping is part of the eBay experience, and all bids placed before a listing ends are valid ? even if they're placed one second before the listing ends.

BONUS MATERIAL: Dan Vergano's Q&A with Alvin Roth and Axel Ockenfels

1. Do you view sniping as a problem? Some eBay sellers have complained that sniping works to artificially lower auction prices. What is your view?

OSniping can help bidders to get better prices on eBay. eBay. But sellers too can profit from sniping, because the possibility of sniping may attract more bidders. For instance, sniping can lead to more bidding from expertsby bidding late, experts can avoid giving information to others through their own early bids. bids. Sniping can also increase the excitement and entertainment value of bidding, which again attracts more bidderSniping is a feature of the auction that eBay bought into when it chose to have a hard close.close. They must think it adds enough to the auction, in entertainment value, in allowing experts to protect their information, etc. to make up in increased bidders what it loses in lost bids and bidding wars.

2. If your work and this South Korean paper show that sniping is rational and effective, why doesn't everyone use the strategy?

Ockenfels: On eBay, not the last bid but the highest Furthermore, last-minute bids sometimes come in too late, after the close of the auction. So, it can be a perfectly sensible strategy to submit a bid early. In fact, depending on the situation, game theory supports both early and late bidding strategies. However, we are also seeing a lot of non-rational, naive behaviors on markets such as eBay. There is no reason to suppose that everybody always behaves in a rational and effective way. This is especially true for eBay, where many experienced and sophisticated traders interact with many unexperienced, naive bidders.dders.

Roth: EBay isn't an English auction, it is a second price auction with prIf you're a busy guy, you might find it better to put in an early proxy bid, high enough to have a chance of winning.nning. The winning bidder isn't the last bidder, it's the bidder with the highest proxy bid (and the earlier bidder in case So sniped bids only get lower prices when other bidders would have been willing to raise their proxy bids, but don't have the chance. That happens often enough so that sniping is a good strategy for those with the time ....e ....

3. How does this new study's approach strike you compared to the one you published in 2002? My understanding was that it rested on game theory, so I'm just trying to see how you see things.

Ockenfels: We closely intertwine game theoretical, laboratory and field analyses. Taken together, our studies help in understanding how the market microstructure qualitatively influence participants' strategies and overall market performance. The new study looks at bidding phenomena from a very different perspective and thus takes a very different approach. It quantitatively analyzes statistical properties of dynamic bidding patterns on eBay ? without addressing institutional complexities or equilibrium aspects of behavior.

Roth: We take a lot of approaches, empirical, theoretical, experimental. And so we are able to look into the multiple causes of sniping, and how they are influenced by the auction rules (and why, therefore, there's so much less late bidding on other kinds of auctions, for example.) But the big divide between physics and economics is that physicists tend to study processes that don't have any human volition in them. Molecules do what they do without forming opinions about what other molecules do. Sometimes this physics approach can also yield some insights into large markets, where each player is small enough to be inconsequential. And eBay must have looked that way to the authors of this article, since they report that in one day they have data from 264,073 auctions involving 384,058 distinct bidders. On the other hand, when I look at those numbers, what strikes me is that there were fewer than 2 bidders per auction in their data. To put it another way, a lot of auctions in their dataset had only a single bidder. Obviously conclusions about sniping are going to be different in such auctions (and in our analyses we normally exclude them).

4. Do you see a better auction strategy for online auction?

Ockenfels: What is a good bidding or selling strategy in online auctions depends on the context, such as the degree of competition and the available information about the value of the object. However, there is a fast-growing applied literature in economics on auction/market design and bidding strategies. (See Roth: http://kuznets.fas.harvard.edu/~aroth/papers/engineer.pdf.)

Roth: I think you might do the most good if you advise bidders to form an opinion of how much they are willing to pay for an item, so that they don't get caught up in a bidding war and pay more than they will be But, that being said, if they know what proxy bid they want to submit, it won't hurt them to submit it very near the end (but neither will it help them much, or often?) So, sniping is a good strategy, for those with the time to do it. (You can also pay a fee to third party sniping software on the web, like esnipe.com or others ....)hers ....)

5. What do you see as the key point(s) to make to readers about a study like this one? How do the results apply to other auctions?

One of the general lessons that comes out of our research in "economic engineering" is: detailFor instance, our studies demonstrate that replacing eBay's hard close by a soft close, which allows bidders to always respond to late bids, would remove the strategic incentives to snipe and thus substantially affect bidding behavior. behavior. Bidders respond to incentives, and incentives can be strongly affected by the details of the auction rules and algorithms. This is true for all auctions, including, for instance, spectrum, electricity and procurement auctions.

http://www.usatoday.com/tech/science/colum...s-of-ebay_x.htm

and some papers:

http://kuznets.fas.harvard.edu/~aroth/pape...eryshortaer.pdf

http://kuznets.fas.harvard.edu/~aroth/pape....experiment.pdf

http://kuznets.fas.harvard.edu/~aroth/pape...librium.geb.pdf

http://kuznets.fas.harvard.edu/~aroth/papers/eBay.ai.pdf

roth and ockenfels give several reasons why sniping is a good strategy.

[_bobcat_ Veteran]

Please explain me the difference:

1. Over a period of 7 days, 10 people people place in bids, thus driving up the price gradually.

2. Over a period of 7 days, nobody places a bid until the last 5mins where there are 10 people bidding against each other causing the price to go up.

There's absolutely no difference.

.....

OR

3. Over a period of 7 days, 10 people place in bids, thus driving up the price gradually and then in the last 5mins there are 10 people bidding against each other causing the price to go up even more.

Often there will be many people on there with no limit or a higher limit. And you want to get that item for that price. You still want the best chance of getting the item. It's competition. By bidding earlier on you are putting the price up earlier on, meaning that there is more time for it to get even higher.

From my point of view, if something went over my limit early on, I might re-evaluate my budget and make a higher bid beacuse I want the product. If it was the last few minutes I wouldn't have the time to consider if I can afford it.