How eBay can save itself in 1 day(bradleyspencer.com)
bradleyspencer.com
How eBay can save itself in 1 day
http://www.bradleyspencer.com/2009/how-ebay-can-save-itself-in-1-day/
24 comments
How about you bid your "reservation price" and have no regrets? Simply bid the most you are willing to pay and then last minute bidders won't matter. That is the beauty of a second price auction.
Human psychology doesn't work that way, unfortunately - the most a person is willing to pay is generally not knowable ahead of time.
Having the "Three More Hours" feature implemented wouldn't effect the strategy of putting your highest bid in. You could still win with proxy bidding the same way you always have been able to before.
All the feature would do would kill the last-minute folks. Nothing more, nothing less.
All of the "bid and forget it" folks (i envy your discipline) still win if you value it more than the next guy.
All the feature would do would kill the last-minute folks. Nothing more, nothing less.
All of the "bid and forget it" folks (i envy your discipline) still win if you value it more than the next guy.
That's one way, but it doesn't approximate real world "bidding".
I definitely think eBay would be better off with this feature implemented
I definitely think eBay would be better off with this feature implemented
Ebay does this bidding for you. Anytime you enter an auction, the price you are willing to pay should be independent of how everyone else in the room values the object. If your willingness to pay is a function of the last bid, then you probably should stick to fixed price sales.
I don't disagree. The best approach is to always put your maximum bid in. But human nature plays a big part in auctions, and I think ebay should note this.
It seems that most people, given 3 hours to think about and consider the regret they would feel if they didn't get what they are bidding on, would usually convince themselves to skip a coffee and add another five dollars to their bid.
you are totally right, but humans are far from rational.
It seems that most people, given 3 hours to think about and consider the regret they would feel if they didn't get what they are bidding on, would usually convince themselves to skip a coffee and add another five dollars to their bid.
you are totally right, but humans are far from rational.
"but it doesn't approximate real world "bidding"."
At the last few auctions I've been at (Mostly Used Computer Equipment) - the people who purchased real volume showed up with a Item List and Price, and just kept holding up their paddle until their price was hit, and then they pulled it down. They didn't really care that someone managed to purchase that Dell Latitude 610 for $110 instead of their last bid of $105. They were done at $105.
So, in some cases, eBay actually does precisely mirror real world bidding.
At the last few auctions I've been at (Mostly Used Computer Equipment) - the people who purchased real volume showed up with a Item List and Price, and just kept holding up their paddle until their price was hit, and then they pulled it down. They didn't really care that someone managed to purchase that Dell Latitude 610 for $110 instead of their last bid of $105. They were done at $105.
So, in some cases, eBay actually does precisely mirror real world bidding.
I seem to remember that they used to have that feature (or was it some other auction site)?
While I hate the issue, too, there might be disadvantages for the buyer, too. For example if the auction gets extended for 3 hours with each bid, it might mean that you have to sit around forever monitoring the auction if you really want the item.
A better fix might be to allow sniping (automatic bidding in the last second).
The reason for last second bidding is to avoid the pitfalls of human psychology, I think. If you start earlier and outbid other people, they might get into a bidding frenzy and prices will be driven higher than what makes sense.
I suppose ebay outlaws sniping because they actually want that effect: the higher the bid, the more money ebay gets. Personally I would prefer to decide on one price and stick to it, so sniping would be perfect for me.
All in all I suspect that ebay tested the "prolong the auction" feature and found that not prolonging it somehow works better - or at least it used to work better.
While I hate the issue, too, there might be disadvantages for the buyer, too. For example if the auction gets extended for 3 hours with each bid, it might mean that you have to sit around forever monitoring the auction if you really want the item.
A better fix might be to allow sniping (automatic bidding in the last second).
The reason for last second bidding is to avoid the pitfalls of human psychology, I think. If you start earlier and outbid other people, they might get into a bidding frenzy and prices will be driven higher than what makes sense.
I suppose ebay outlaws sniping because they actually want that effect: the higher the bid, the more money ebay gets. Personally I would prefer to decide on one price and stick to it, so sniping would be perfect for me.
All in all I suspect that ebay tested the "prolong the auction" feature and found that not prolonging it somehow works better - or at least it used to work better.
> A better fix might be to allow sniping (automatic bidding in the last second).
In a sense they have that already, since eBay is a (quasi) second-price auction.
In a sense they have that already, since eBay is a (quasi) second-price auction.
What do you mean?
A true second-price auction is one where the bidders (secretly) inform the auctioneer of the maximum price they'd be willing to pay, and the bidder who nominates the highest price wins, but pays the price nominated by the second-highest bidder. This is done in an attempt to eliminate the "winner's curse" and encourage the bidders to nominate their true maximum price. See http://en.wikipedia.org/wiki/Winner%27s_curse
eBay's proxy bidding system approximates a second-price auction because if everyone enters their true maximum, the person who nominates the highest value will pay (2nd-price + minimum-bid-increment).
eBay's proxy bidding system approximates a second-price auction because if everyone enters their true maximum, the person who nominates the highest value will pay (2nd-price + minimum-bid-increment).
There are serious economists who look at these issues. The book Snipers, Shills, and Sharks, http://press.princeton.edu/titles/8435.html is a great summary of the research that includes this approach among a hundred others.
eBay has heard this proposal at least a bajillion times before, including at least 3 for me. I don't know what their reason is for not doing it that way but it's been heavily considered and rejected.
Yeah, i figure that they actually won't change anything. it's just striking how different ebay is from an actual auction. i had never been able to pinpoint what part of it was out of whack though.
> "I don't know what their reason is"
I want to know.
I want to know.
My guess is, they have tried it and it does not work. People don't want to wait around 3 hours to see if they successfully bought something, they want to get confirmation asap.
I know auction sites which set a smaller increment (5-10mins). I do wonder, why eBay hasn't tried it. 3 hours does seem too long.
This would make eBay more complicated. I suspect that eBay will be slowly overtaken by less complicated rivals.
And dude, just bid your max price and then calmly await the verdict. I sure as hell don't want to have to watch nervously over a continuously extending date of purchase.
And dude, just bid your max price and then calmly await the verdict. I sure as hell don't want to have to watch nervously over a continuously extending date of purchase.
Ebay still has auctions? I thought it all went Buy It Now years ago.
New Zealand's eBay clone - trademe.co.nz - has auto-extend for auctions where a bid was just received.. The auto-extend is only 5 minutes though.
This doesn't eliminate last minute bidders though - rather it just extends the period of the 'last minute bidding war' till someone gives up.
So. Its good idea, but you don't want a 3 hour auto-extend - 3 minutes would be better. 3 hours, as suggested, would probably mean many auctions would not end for weeks and weeks and would likely frustrate the heck out of bidders and sellers alike.
This doesn't eliminate last minute bidders though - rather it just extends the period of the 'last minute bidding war' till someone gives up.
So. Its good idea, but you don't want a 3 hour auto-extend - 3 minutes would be better. 3 hours, as suggested, would probably mean many auctions would not end for weeks and weeks and would likely frustrate the heck out of bidders and sellers alike.
Shit. Thats cool. Ok, five minutes is more than fine.
The Australian clone (GraysOnline) adds 15 minutes and emails you if you're outbid at the last moment.
Another fix would be if the exact ending time would not be published. Just something like "This auctions ends in the next 20 minutes".
eBay just holds it's "ending time" as some sort of holy grail. I really have no idea why.
Even if this was just a feature that sellers could opt for (for five bucks more or so), I think it would make a world of difference.
Even if this was just a feature that sellers could opt for (for five bucks more or so), I think it would make a world of difference.