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| ▲ | mort96 5 hours ago | parent | next [-] | | I don't understand this line of reasoning. I don't do auctions, but if I did, it would be because I want that item. When I want something, I never have an absolute hard price ceiling; if I'm willing to pay $10000, I'm willing to pay $10000.01. I can't imagine anyone who would be happy to pay $X for an item but not $X + $0.01. Like, if I'm at a store and an item costs $500, and I bring it to the checkout and the cashier says "oh sorry that was mislabeled, it's $500.01 not $500", there is no world in which I go "okay never mind then, $500 was my max". There does not exist a situation where I've decided I want something at price $X, but would not buy it at price $X + $0.01, because $0.01 is absolutely negligible. So where does this fantasy of an absolute max price come from? | | |
| ▲ | less_less 4 hours ago | parent | next [-] | | It's not supposed to be some red line absolute max price, but rather "how much is this item worth to you?" You set that as your max bid price. If you get it at auction for less than that, you got a good deal, but if you buy it for more, you got a bad deal. If someone outbids you, then maybe it was worth it to them, but you (supposedly) would not have wanted to buy the item for that much, and would rather use your money for something else. For tricky-to-price items like unique art pieces, the idea that you can pin this down might be a fantasy, but for commodity items it's pretty reasonable. If you can buy the same thing at costco dot com for $500, then it's probably not worth more than $500 to you, and if at auction you get outbid and it sells for $500.01 then you'll shrug and go order the same thing for a cent less, having wasted only a few minutes of your time. If the item you're bidding on is discontinued (e.g. it's last year's model) but you can buy a slightly better one for $550, and you can spare that extra $50, then again you won't be too sad about getting outbid. Online auctions are more popular for used items, but again in that case you usually still have an idea of what a used item is worth to you. | | |
| ▲ | mort96 3 hours ago | parent [-] | | The logic of "you shouldn't ever need to snipe, just bid your max price" only works if we assume that the max price is a red line though. If I "value something" at $5000 (as in I want to buy it at $5000), and I bid $5000, and someone bids $5000.01, I would probably be happy if I sniped them and got the item for $5000.02. | | |
| ▲ | less_less 2 hours ago | parent | next [-] | | I'm not defending "you shouldn't ever need to snipe, just bid your max price" as a hard principle, just trying to explain where the idea comes from. Sniping can be strategic for lots of reasons: you don't have to commit to a bid until the last second (in case you find a similar item for cheaper elsewhere), you deny other people information, you might avoid anxiety from wondering whether your bid will win, etc. That said, the max price is supposed to be a price where you are not especially happy to get the item at that price, but not really sad either, a price where you would say "well, I hoped for better but I guess that's a fair deal". That's not realistically pinned down to the cent. But if you set a max price at $5000 and would be happy to get the item at $5000.02 (for some reason other than satisfaction from sniping), then you set your max price wrong, or at least differently from how economists expect you to set it. | | |
| ▲ | mort96 an hour ago | parent [-] | | > But if you set a max price at $5000 and would be happy to get the item at $5000.02 (for some reason other than satisfaction from sniping), then you set your max price wrong, or at least differently from how economists expect you to set it. I think this is the problem. When most sciences observe reality diverge from the model, they see that as a flaw in the model. When economists (at least you HN "economists") observe reality diverge from the model, they seem to see that as a flaw in reality. The model is wrong. | | |
| ▲ | imtringued 7 minutes ago | parent [-] | | According to you, a bidder should always be willing to extend the bid to infinity since each increment is only one cent more. |
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| ▲ | 3 hours ago | parent | prev | next [-] | | [deleted] | |
| ▲ | imtringued 8 minutes ago | parent | prev [-] | | By your logic, there is no such thing as a limit or maximum bid. It's like you don't understand the concept of a maximum. If you're always willing to add one more cent then that wasn't your maximum. |
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| ▲ | retsibsi 3 hours ago | parent | prev | next [-] | | Your max price should be the price such that you're indifferent between buying the item at that price and not buying it at all. At a shop, usually you're paying less than the maximum you'd be willing to pay, because the shop's prices are fixed and it would be a big coincidence if the price they set happened to match your max price exactly.[1] So even if we model you as homo economicus, it's normal that you're almost always fine with paying $X + $0.01. In the case where $X really is your max price (i.e. it's right at your threshold of indifference), the idea of rejecting $X + $0.01 seems less silly. You were already very close to deciding $X was too much, so you're probably feeling ambivalent about making the purchase, and the trivial nudge of an extra cent being added to the price might as well be what pushes you over the edge. [1] There are exceptions, e.g. when you have a negligible preference between brands A and B, so you're defaulting to brand A because the prices are exactly the same, but you would buy B if it were marginally cheaper. But that doesn't affect the main point here. | | |
| ▲ | mort96 3 hours ago | parent [-] | | I don't see why I would buy something if I'm indifferent to whether I buy the thing. | | |
| ▲ | retsibsi 3 hours ago | parent [-] | | So it should be the highest price such that you're not indifferent, you marginally prefer to buy it. The point is that you're right at the threshold where it's just barely worth it to you. | | |
| ▲ | mort96 3 hours ago | parent [-] | | The gap between total indifference and wanting something bad enough to bid on it is always going to be more than $.01. | | |
| ▲ | retsibsi 3 hours ago | parent [-] | | I reckon that's empirically false. Shops set prices like $499.99 for a reason. (And it has to be theoretically false, otherwise $X is equivalent to $X + $0.01 for all X, and so if you'd buy something at 1c you'd buy it for the contents of your bank account.) If you still dispute this, you need to try to explain how a larger price difference can affect your decision. If you'd happily place a $1 bid, and you'd definitely not place a $100 bid, and a 1c difference could never deter you from placing a bid, then... well, how is that possible? | | |
| ▲ | mort96 2 hours ago | parent | next [-] | | Regarding the last part: it's simple, $1.01 is less than $100 This process doesn't work endlessly. You can't just add $.01 a billion times and I'd still pay it. But it works once or twice. Shops set prices like $499.99 due to funny psychological effects: $499.99 is still a price "in the 400s" while $500 is "in the 500s". Nobody sits down and thinks logically about it and concludes that no, the $.01 difference between $499.99 and $500.00 crosses the line. But people see $499.99 and the brain initially goes "oh, it's only 400-something". | | |
| ▲ | retsibsi an hour ago | parent [-] | | Are you: - agreeing there must be some threshold such that if the price is $X then you will buy(/bid on) the item, but if the price is $X + $0.01 then you won't; - but maintaining that in a case where you have already decided to buy/bid and the price then rises by $0.01, you will always go ahead and pay the extra cent (provided this hasn't already happened a bunch of times)? If so, then I don't see the original problem. Do your best to estimate X (or, more specifically, the value of X you actually endorse as your 'true' valuation), and put that in as your maximum bid. If you get the item at $X you'll be marginally pleased; if you get it for less then you'll be more pleased; and if you miss out on it then you shouldn't mind, as you knew it was only going to be just barely worth it at $X. If you're actually disagreeing with the first point, then you still need to explain how that can make sense. It's coherent to say that in practice, after making the decision to buy at a given price, you would always accept a 1c price rise but at some point between the first 1c rise and the billionth you'd tell the guy to piss off. But that's not the same as saying the actual value of the item, separate from the emotions involved in the purchase process, is somehow indeterminate. If it's not worth it at $1, and it's worth it at $100, but 1c can never take it from "worth it" to "not worth it", then ? | | |
| ▲ | mort96 an hour ago | parent [-] | | > are you > - agreeing there must be some threshold such that if the price is $X then you will buy(/bid on) the item, but if the price is $X + $0.01 then you won't; No, I'm not. If I will buy an item for price $X, I will buy the item for the price $X + $.01. The decision to purchase something is more complex and cannot be encapsulated as one single dollar value. I think something your model fails to account for is: there is friction associated with a purchase. I will not necessarily go through the process of buying something whose "value" is $0.1 even if its price is $0.09, because there is friction to making a purchase which that $0.01 profit doesn't cover. As an example: I recently played a Pokemon ROM hack where there was an NPC selling a nugget for 4999. You can sell the nugget for 5000. That's 1 coin profit; objectively a good trade, right? But going through the process of purchasing something isn't free. So in spite of what your economic models may suggest, I did not stop everything I was doing and spend the rest of the game buying nuggets for 4999 and selling them for 5000, because that would've been boring and my time has value. If I've already gone through a lot of the process to decide to buy something at a certain price (which includes doing research to find out that the thing suits my needs, researching how the market looks for that category of thing, then bringing the item to the cashier or engaging in the eBay auction or contacting a seller), then I've already spent some not-insignificant amount of resources on the purchasing process. A $0.01 price increase will never be enough to stop me from completing that purchase, because $0.01 is not worth going through the whole process again. If I'm already at the point where I want to bid on an item at $X, then I have spent more than $0.01 in effort researching things to bid on, so I would also bid $X + $0.01. | | |
| ▲ | retsibsi 39 minutes ago | parent [-] | | > If I've already gone through a lot of the process to decide to buy something at a certain price [...] then I've already spent some not-insignificant amount of resources on the purchasing process. Yes, that's part of what I was trying to account for with my second bullet point. But before you've made that initial decision, there must be some price that would cause you to make it a 'yes' and some marginally higher price that would cause you to make it a 'no'. This value obviously won't be totally constant across time -- it will vary with your mental state. But at any given time (and for any given roll of the mental dice, if we're assuming there's some true indeterminism here), it must exist. So when we're translating from "what's the maximum I would pay" to "what should I bid", we can imagine that we're in our most rational and clear-thinking frame of mind, aren't seized by any strange impulses, and so on. The time and effort of researching a different item also has a value that could be pinned down in a similar way. So it doesn't fundamentally change the arguments here; if product A would be worth $X in a vacuum, but you'd happily pay $Y to avoid going through the research process again, then you should bid $X+Y. | | |
| ▲ | mort96 6 minutes ago | parent [-] | | Before I have made that initial decision, and before I have invested resources into evaluating what I think the value of a product is, I do not have a price in mind. Deciding on a price I think is fair for a product takes effort. The more accurately I want to determine it, the more effort it is. Could there exist some hypothetical subjective value? I mean maybe. But not one that I have knowledge of, so it's not something that can even hypothetically affect my behavior. The only time at which I could possibly be aware of my own subjective value judgement of a product necessarily has to be after I have invested time to evaluate it. |
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| ▲ | direwolf20 2 hours ago | parent | prev [-] | | Adding a single grain of sand to a small pile of sand never turns it into a big pile of sand, yet big piles of sand exist... well, how is that possible? https://en.wikipedia.org/wiki/Sorites_paradox | | |
| ▲ | retsibsi an hour ago | parent [-] | | Yes of course I know the Sorites paradox (and I can give my take on it if you are interested), but what point are you making in the context of this discussion? |
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| ▲ | thornewolf 4 hours ago | parent | prev | next [-] | | it's because this argument of "what is $0.01 more?" can be extended forever, implying you are willing to pay an infinite amount of money for anything. since we know this is silly, we try to understand what our "real" maximum is. this is difficult to do for exactly the reasons you mention in your comment! surely $0.01 is negligible! there is a tension here. and so, absolute max price is not a fantasy - the world would be absurd if it were - but instead its a real and difficult to construct value | | | |
| ▲ | direwolf20 4 hours ago | parent | prev [-] | | The field of Economics |
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| ▲ | hattmall 7 hours ago | parent | prev | next [-] | | But I want to get the item as cheaply as possible, not pay as close to my maximum without going over. | | |
| ▲ | no-name-here 7 hours ago | parent [-] | | That's exactly what automatic bidding does - it only outbids enough to beat the competing bid (up to your max) without paying any more than is needed. https://www.ebay.com/help/buying/bidding/automatic-bidding?i... (Manual bids have bid increments as well. Although others have pointed out that advance bidding might cause others to bid more than they would if they thought no one else wants the item. ) | | |
| ▲ | throwaway_20357 7 hours ago | parent [-] | | Yes, what I think happens is the following: User A's price ceiling is $10, User B's $12. When both reveal their max price early, the item will go to $10.50 ($0.50 increment over A's max price). User A then has plenty of time to notice the item being valued at $10.50 by someone. In many cases users then adjust the value they assign to the item and increase their bid. The result: User B has to pay more than $10.50 they would have paid when sniping the item seconds before auction expiration. |
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| ▲ | TeMPOraL 7 hours ago | parent | prev | next [-] | | Not everyone is in auctions for the game, some people want to actually get the item. Though I imagine there's less and less of them, as most figured out long ago that auctions are a stupid waste of time. In fact, I'm somewhat angry at sellers setting up auctions if there's no other way to acquire a specific item. Why they won't put a minimum price they're happy to part with some items for, instead of wasting time of a lot of people by withholding target price and pretending they're earning premium through work? | |
| ▲ | cm2187 7 hours ago | parent | prev | next [-] | | But if that someone isn't rational it is better to not give him the time to react to your highest bid. Also some sellers seem to use some fake accounts to bid high on their own item, revealing your max bid, then cancel their bid, then bid right under your max bid to maximise their sell price. Happened to me twice, and now no longer setting my max bid in advance since. | | |
| ▲ | neilfrndes 7 hours ago | parent | next [-] | | I thought eBay doesn't allow you to cancel a bid you placed. | | |
| ▲ | cm2187 7 hours ago | parent [-] | | It does. You can argue you bid a wrong amount by mistake. It's necessary because mistakes do happen, and it even happened to me to retract a mistake once (was bidding on two items simultaneously in two tabs and mixed them up). But it gets abused. |
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| ▲ | ycombinatrix 5 hours ago | parent | prev [-] | | What were you buying? | | |
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| ▲ | bena 16 hours ago | parent | prev | next [-] | | It gets into the nature of "Which grain of sand makes it a pile?" Knowing people bid snipe by bidding one cent over whole dollars, would you consistently bid two cents over if it meant you would win more of your auctions? One cent is negligible. If you asked me if I would have paid $10.01 instead of $10.00, I'd probably say "Sure". $10.02? $10.03? Like, where does the line get drawn? And then you come at it from the other way. Let's say I'd pay $10, but not $11. But what about $10.50? $10.25? Or we can go down by pennies again. I agree, put in your limit and walk away. If you get overbid, even by a cent, don't sweat it. That's the game. But I can see why people get frustrated when they lose an auction by one cent. | | |
| ▲ | dmurray 8 hours ago | parent [-] | | Maybe eBay should publish the price the winning bidder actually bid. This would let people stop thinking "I lost by one cent" in that situation. It also has a marketing benefit: look at all these people who got great bargains relative to what they would have paid. And it's not an unreasonable amount of transparency: in second price auctions e.g. for stamps or electricity, it's normal to publish the details of all the bids. Of course eBay has already thought about this more deeply than me and perhaps trialled it and decided they didn't like it. Maybe it's off-putting to sellers to see they lost something for $10 to a buyer who would have paid $30? | | |
| ▲ | bena an hour ago | parent [-] | | The only way to win by a cent is to put your bid at that. If the current price is $5 and your max bid is $30 and I put a max bid of $100, it will make the current price $31 - $35, whatever the increment is. To get ebay to accept a bid of one cent over, you have to explicitly set that. Let's say, I'd actually pay $30 as well. $30.01 isn't materially different. So if I put in $30.01, my bid becomes higher than yours. |
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| ▲ | nutjob2 16 hours ago | parent | prev [-] | | If you enter your maximum bid in ebay you're revealing it. With sniping no one can discover your maximum bid. The 'nibblers' will invariably show up and bid small amounts until they exceed your maximum bid, while not revealing theirs. | | |
| ▲ | jsmith99 15 hours ago | parent [-] | | It's a second price auction. Who cares what their limit is. If it's more than the value of the item to you then they will win. Otherwise you will win. | | |
| ▲ | ryandrake 14 hours ago | parent [-] | | Exactly. I could put $100,000 as my max bid, but if second place only bids $10, then all they know is I bid $11 (or whatever the increment is). eBay doesn't tell anyone my max is $100K. | | |
| ▲ | krackers 10 hours ago | parent [-] | | I think the reasoning is that people are irrational, and people don't actually have "hard limits' so others will bid in increments to exceed it. So in aggregate you will end up hitting your max more often because of others' irrationality than if it was a sealed auction and you don't give them that chance. | | |
| ▲ | vidarh 8 hours ago | parent | next [-] | | People also will often have a "hard at the time" limit that turns out to be very soft when they realise other people also wants the same thing. A bidding war can make the perceived value of an item increase. | |
| ▲ | nutjob2 2 hours ago | parent | prev [-] | | This is my point. If you look at the actual behavior and read people's comments in forums you'll see that almost no one sticks to their "hard limit". Including me! People's competitive behavior, or "you're not taking this from me," or "I've definitely got this item and have made plans" or any number of other emotional behaviors take over. People's railing against sniping also demonstrates this. |
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