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How to Win on Ebay: Snipe
grammar fascist writes "A study by South Korean physicists confirms what some of us have taken for granted for a long time: a single bid at end of auction nets the most wins. From the article: '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 each bid. "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." The study appears in the current Physical Review E journal.'"
Proxy bidding is supposed to allow easy auctions with fairness. The problem is the sniping phenomenon. And there is an easy fix: A bid will extend the auction by ~10 minutes if received in the last 10 minutes. Voila, no more sniping.
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People like to bid based on even dollar amounts. I've won auctions by bidding 2-3 cents more than the even dollar amount.
For example, if you want to bid $20 for something, bid $20.02 instead so if somebody else puts a bid of $20 on it, you still win.
Studying ebay counts as physics in South Korea?
What's the probability of overpriced shipping?
What?
1 Snipe eBay auctions
2 ?????
3 Profit!
Actually, I have a forumla that gives the best chance of winning an auction: bid 10x what the item is worth. Can I have some money to study the obvious^H^H^H^H^H^H^H^H research the tricky questions of our age now please?
The fact that this was tagged as duh before it had any comments is very telling.
If all you have is a grenade, pretty soon every problem looks like a foxhole -- MightyYar
Heisenbidding: You can know how much you will pay, OR if you'll get the item or not, but you can't know both.
Wouldn't eBay's automatic bidding prevent that? If you were willing to bid $20 and it was currently at $10, th esniper needs to bid $21 to win, which is in theory more than you were willing to pay. Personally I'm suspicious of such tools, but the idea is in the event of a tie the earliest bidder wins, right?
You are in a maze of twisted little posts, all alike.
How is this such a problem? I don't really get what is not "fair" about sniping?
If the dumbasses that got their auction "stolen" at the last minute didn't put in the absolute maximum that they wanted to pay for the item, then that's their own fault. Either your willing to pay more than anyone else or your not. If you don't put your maximum bid in straight off and keep incrementing your bid, you are really just engaging in really inefficient sniping.
Adding a ten minute extension wouldn't really solve this. It would work great for sellers because the emotionally invested bidders would run up their bids more than they otherwise would. The buyers however would be better off just joining the snipers rather than fighting them. If everyone sniped it would basically revert to the pre-sniping days.
robnator's a bit slow... if everyone snipes to win auctions, what's the trouble? If you really wanted it, you'd snipe with bids like $1000...
thing with the auction concept is you're SUPPOSED to bid what you'd like to pay if no one else is running up the price (rinse. lather, repeat) until you reach your wallet's limit. eBay's modification imposes a time limit to keep auctions from taking forever, but with the maximum bid concept it brings its 'auction' back towards the original.
the reason people snipe (vs. just bidding their personal maximum to start) is fear of being run up by shills. it's a survival mechanism for your money, if such a thing isn't self-contradicting on eBay...
"If...you can't be a good example, then you'll just have to be a horrible warning" - Catherine Aird
Well, the buyer has to
pay more, but getting sniped at the end of the auction you really wanted sure sucks, so in that way the buyer
wins.
If you "really wanted" the item, why wasn't your maximum bid price higher?
When I buy something on eBay, I always bit the most I'm willing to pay for the item. The items I win are usually nowhere close to what my maximum bid could have been, and the items I don't win sold for more than I was willing to spend.
Snipers cost people like me nothing. The only way they can hurt you is if you are compulsive spender who suddenly wants something even more just because somebody else was willing to pay $1.50 more than you originally thought it was worth.
Information wants to be anthropomorphized.
eBay has certainly considered and rejected this idea. If this were an auction type offered on eBay, every rational seller would choose it.
The reason it's not offered is that eBay is more dependent on bidders than sellers at the end of the day. Yes, sellers pay the fees to eBay, but sellers are less mobile than buyers - if a seller is not going to use eBay, what will they use? No other auction site has traffic within an order of magnitude of eBay. Most sellers' only other rational option is a local fixed-price sale through, e.g. craigslist - not an acceptible option to many sellers. Thus, how the sellers feel about sniping is immaterial to eBay - they're the only game in town and the sellers will come anyway.
OTOH, buyers care less about where they buy things than sellers do about how they sell them. Change the rules on eBay at this point and they will alienate their base of idiots^Wbuyers - the traffic that keeps eBay the only game in town. They already have a major fraud problem that's driving sales of some especially fraud-prone categories like computers and electronics to sites focusing on local cash deals like craigslist. The last thing they want is to change anything else that might alienate buyers.
(Yes, some buyers hate sniping, but most buyers hate bidding wars even more. Anything that helps sellers raise their average sale price hurts buyers, and since the buyers are what bring in the sellers...)
-Isaac
I am not a lawyer, and this is not legal advice. For Entertainment Purposes Only.
This isn't as irrational as you might suppose.
I might bid a maximum of $75 on an old computer that's hard to find, but once I find out that 4 other people are willing to bid higher than that, the perceived value of the old computer has now risen in my eyes, based on the perceived demand. I therefore might be willing to spend more money on that old computer, knowing that the market is large enough so that I could sell it back if I wanted to.
It becomes psychological. I'm an armchair sniper for everything I do on eBay for the following reasons: 1 - People get emotionally invested in auctions for items they really want, especially eBay newbies. By competing with them, you are goading them into increasing their maximum - which screws you as much as it screws them. When the competitive spirit is introduced your price jumps up. 2 - Normal non-sniping bidders most likely will not be watching the final seconds of an auction, so you deny them the opportunity to revise their bid and possibly outbid you; again, this comes down to the competitive spirit and peopel going "weeeeeeell, I suppose I can pay $30 instead of $25..." 3 - As other poster suggests, you hide the true value of something. Most seasoned eBay users will simply go to identical past items to get a bead on what to expect, but often I see auctions go *above* MSRP. You do not want to give away what you're willing to pay for it until you absolutely must.
South Korea!
First they had a veterinarian who claimed to clone the first human!
Now they have a PHYSICIST who claims to be an expert on EBAY AUCTIONS!
Next up: a lawyer who can communicate with dolphins!
Yay Korea! Insane on both halves of the peninsla!
It sounds like one of the basic assumptions of this article is that the object of ebay is to win. That's an incorrect assumption: the object of eBay is to get what you want at the lowest price you're willing to spend. If you're only willing to spend $25 on an iPod, put in a bid of $25. eBay's proxy bidding will handle the pissant bidders trying to nickel and dime their way up. Eventually one of two things will happen: A) you'll be the high bidder and get the item you want for a price less than or equal to the amount you wanted to pay, or B) someone will outbid you and you won't get the item at the price you want, at which point you can either let it go or re-evaluate the amount you're willing to spend.
People get caught up in the "game" of bidding on eBay which is how you see digital cameras that retail for $299, and sell on Amazon for $240, sell on eBay for $320 -- that's an example I've seen with my own eyes. People are stupid and so sniping is effective.
rooooar
But the problem with this is that you never win the item. If you still just bid the one amount you're willing to pay, but you do it with a snipe, you're much more likely to actually get the auction item. Using a snipe program like jbidwatcher, it's just as easy to snipe as it is not to, so why wouldn't you?
Schrodinger's Bid:
You either won the auction at the moment you placed your bid, or you lost. Until you view the auction results, both are true.
Oh yeah, also, you were bidding on a cat that was possibly gassed to death.
Fermi's Bid:
As long as your result is within an order of magnitude of the highest bid, you win.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
Adding a ten minute extension wouldn't really solve this. It would work great for sellers because the emotionally invested bidders would run up their bids more than they otherwise would. The buyers however would be better off just joining the snipers rather than fighting them. If everyone sniped it would basically revert to the pre-sniping days.
But think about a real auction: If the auctioneer says "going once...twice..." the item doesn't just go to the person who threw up their paddle at the last moment. It gets extended for another five seconds or so. Now, maybe the same dynamics don't work in the web world, but at least it puts perspective into it.
What if eBay also had another auction type in addition to normal and Buy It Now ones: silent auctions. It tells you when it ends, the seller may optionally give a reccomended amount, and you get to put in your bid, without knowing what anyone else put down. Now you'd be more compelled to put your maximum bid down.
"Beware of he who would deny you access to information, for in his heart he dreams himself your master."
A+A+A+AAAAAAA++++++ Great article, would read again.
you get a lot of people who really wan't the item but have set a budget, by bidding early you get theese people caught in the heat of the bidding action and encourage them to bust thier budget.
the result is they overpay for the item and you don't get it at all, the only winner is the seller.
sniping does not encourage this behaviour as by the time they see thier outbid its too late.
note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register
Every buyer with any brains at all figures out sniping is the way to go. I have been a seller for over 5 years, and I make more money on my auctions when I have them end on a Sunday afternoon. More people are home, near their computers, and ready to snipe at that time. I don't ship internationally (too much fraud), so time zones aren't really an issue.
I often get no bids at all up until the last 30 minutes of an auction, when 10 or 20 can suddenly come in.
"The advanced societies of the future will be driven by competing systems of psychopathology." -JG Ballard
Everyone with a brain is agreed that a single maximum-price-you-want-to-pay bid is the best policy.
Your problem is that you don't realise that there are a lot of nonlogical people out there, who don't bid their maximum price, but put in a bid, then if they see they've been outbid, put in another one and so forth. To minimise the inflationary effect of those fools, bid as late as possible, not as early as possible.
That's why sniping is the smart move. It's not the snipers that are the cause of the "problem", it's those incremental bidders. Snipers are just keeping your price DOWN (despite all appearances to the contrary) to the benefit of all bidders...
Then $10.00 wasn't really a maximum value was it? The fault would be yours for not bidding $10.05 in the first place. If you bid your absolute maximum amount on every auction, then when you get outbid you won't feel bad for losing the auction.
Works for me - I see something I like, then I bid my max and forget about it. If I get an email later saying that I won the auction, I go back and pay. I turn off those uselsss "you have been outbid" emails.
Sniping only works if everyone else is sniping.
Au contraire. Regarding the final price, sniping only works if there are non-rational bidders. Rational bidders bid once and put in their (current) true maximum bid. Intelligent rational people do so at the last minute. If there are only rational bidders, sniping still provides a small advantage because you don't commit to an auction and can always switch to a different auction. But if there are also irrational bidders, the type of people who think that the maximum is a number that can be increased if necessary, then sniping also likely results in a lower price. Since the behaviour of these people depends on the other bids, not putting in your bid until right before the end means that you don't contribute to the amount that they're willing to pay. Since Ebay auctions are second-price auctions, their price is the price you're going to pay (unless another rational person outbids them), and every dollar that they bid lower is a dollar you save if you win the auction.
For many regular users of ebay, the purpose of ebay auctions is not to maximize economic profit on one single auction. The purpose is to maximize total economic profit across many dozens of auctions conducted over a long period of time. When you are a repeat participant, it can make sense to adopt a strategy which often leaves money on the table, as long as the same strategy has a small probability of winning a lot of money.
The effectiveness of sniping cannot be explained in purely economic terms; one needs a smattering of game theory. In pure economic terms, your strategy of always bidding your maximum leads to minimal risk: either you win the auction and pay less than your maximum, thus profiting the difference, or you lose the auction and do nothing. Obviously, under your strategy, you would always prefer to win the auction, since this is the only scenario that leads to profit. The problem with this strategy is that you are less likely to win the auction if you place your bid first, because
- Information is asymmetric: by revealing your bid first, you give other participants more information, and more information always helps their strategy (yes I realize eBay hides your true maximum, but nevertheless your bid leaks information -- if nothing else it leaks the information that you are participating);
- Other participants are irrational: The presence of your bid actually causes other people to bid higher than they otherwise would, for various unfathomable reasons which have no grounding in logic.
Because the impact of these problems (especially 2) is somewhat unpredictable and random, the bidding process resembles a type of prisoners dilemma, in which per-instance profit-maximizing play is often not long-term optimal. What makes eBay profitable for repeat buyers is the prospect of winning a small number of auctions at prices far far below the true worth of the items. The sniping strategy is the only way in practice to win an auction at a price dramatically below the true worth of the item, because if you bid your maximum at the outset then the other participants will respond (irrationally) in a manner that raises the winning price. In fact, ironically, the information asymmetry problem exacerbates the irrational bid-raising problem under the eBay auction model, since under this auction model one's true maximum represents a crucial piece of hidden information, and the only way to find out this information is to place bids yourself until you exceed someone else's maximum.For a repeat participant, it is rational and profitable to take the risk of losing (say) 10 auctions each at a price within $10 under the true worth of the item, in order to have a 1 in 10 chance of winning one of those auctions at a price $100 less than true value. Unless eBay changes their auction rules, sniping is and will remain the best way to maximize expected earnings across a large number of auctions.
If all of this doesn't convince you, then maybe the information asymmetry argument alluded to above will convince you. Since placing a bid reveals information to the other participants, you are always better off placing your bid as late as possible in order to minimize the information available to competing bidders. Doing so certainly never hurts you (if we ignore for the moment eBay's tiebreaker rules, whose effects are negligible, since the costs imposed by bidding second are less than the transaction costs of the sale), and it can sometimes help you if the other participants are irrational, which they are.
Ok, let's say I feel like paying $20 and bid $20 early. Then some newbie retard (ebay is full of them) comes and says, "Hmm, that guy thinks it's worth $20, so I'll pay $25". Ok, I've now just lost the item. Alternatively, nobody bids on it and newbie retard says, "I dunno, I guess I'll bid $10, since maybe I'll get it real cheap". At the last second I can then come along and snipe my $20, and win the item. Same $20 top bid, but I lose on the first auction and win on the second.
No.
You just proved his point beautifully. You obviously don't understand what's going on here.
Yes, in a perfect world, everyone would proxy bid like they're supposed to, and nobody would pay more than they're willing to pay for an item. Moreover, the person who was willing to pay the most, would win the auction.
But that's fantasyland. In the Real World(tm), there are two reasons why you should always snipe to get the best deal:
Example: your max bid on an item is $50. DumbJoe has already bid $30, hoping he'll get it for that. You come along and bid your $50 well before the auction ends. The new high bid is set at $31 by eBay's system. DumbJoe is notified that he's been outbid, so in the heat of the moment, he comes in and bids $40. Again, your proxy outbids him up to $41. DumbJoe decides he's not going to let you beat him, so bids $51. Oops, you lose!
Now, let's redo that with sniping. DumbJoe sits as the high bidder at $30 until about 20 seconds are left in the auction. At that time, you place your $50 bid. Price goes up to $31, auction ends, DumbJoe has no time to get caught up in the bidding war. You get the item, and at a damn good price, too.
Let's say many sellers are offering the item you wanted for a max of $50. You bid on the auction that DumbJoe is bidding, and he gets into his emotional bidding war. He drives the price up to your max of $50 before giving up. You win at $50, which is what you were willing to pay. No problem, right? WRONG.
Meanwhile, another auction ends a few hours later, selling the exact same item for $32. Oops! You could have saved $15-20 by either sniping on DumbJoe's auction, or deciding that its price had gone out of line with what the market was paying on other auctions for the same thing. You could take your time and wait for a relatively low-priced auction about ready to end and snipe that. The savings could be substantially below what your maximum price is.
Moral of the story: ALWAYS snipe. Lots of dumbass snipe because they don't understand the proxy bid system. Other dumbasses don't snipe because they don't understand their competition.
What? No. If I will pay up to $100 for an item on eBay, but the current bid is $10, then I'll enter $100. My bid will show as $12 or whatever minimum increment it is. If someone bids $20, my $100 bid trumps them and becomes listed as $22. If someone snipes in the last second at $50, I'll win the bid with $52
You bid $100. It shows as $12. A stupid kid comes along, and bids $15. Your bid goes to $17. The kid bids $20. Your bid shows up as $22. After a while the kid bids $80 and your bid shows up as $85. You win and get to pay $85. Or the kid bids $105 and you don't get the item.
Now if you set up a snipe shot of $100 for that auction, the same kid comes along, bids $15 and leaves happily seeing his bid the highest. You win the auction and get the item for $17.
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