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Re: [Fwd: Question for seller -- Item #597203138]

To: tigers@autox.team.net
Subject: Re: [Fwd: Question for seller -- Item #597203138]
From: Theo Smit <tsmit@home.com>
Date: Sun, 28 Oct 2001 16:46:29 -0700
I guess I didn't make a very clear argument but that's probably because I can
see the merits of either position. If the reserve is way too high, then people
will feel it's not worth their while to bid on the item, so they won't want to
waste the time to even participate in the auction. Therefore, having secret
reserve prices is forcing these people to send letters to the auctioneers to see
what the reserve might be, and that could be regarded as a further waste of
time. To this I say, "get a life". If you're interested enough in an item to
upload the description, then it's no more a waste of your time to place a bid at
the value you think it has, than to check with the seller for the reserve price.

I think the idea of a reserve price protects the seller from having someone
place a low bid just before the end of the auction. Having a bid placed at the
reserve price, either published or secret, is sufficient to make the auction
valid. If no one else was interested in the item, or interested enough to bid up
to the reserve price, then the seller is still better off for having someone
pony up, even if it is at the last second. So the purpose of the auction is not
at all defeated by publishing the reserve, but it does change the tone of the
auction, because everyone knows that until the reserve is reached, the auction
isn't binding.
It helps to clearly understand the bidding rules. Say someone auctions a Tiger
clock on Ebay, and puts on it a minimum bid of $40, and a reserve of $150. No
one can enter a bid below $40, and all bids below $150 are displayed, but would
not force a transaction at the end of the auction. When someone first bids
beyond the reserve price, the auction value goes up to only the reserve price,
and now the seller and winning buyer are compelled to complete the transaction
at the end of the auction. Here's the important part: The winner of the auction
is the bidder that first bid the highest value, but the selling price is the
value of the second-highest bid. If I wanted to buy that Tiger clock, I could
bid $300, and the auction value would go to $150 and list me as the high bidder.
My actual bid value is not displayed. If someone else subsequently bids $200,
then Ebay says "good try, but you're still not the high bidder", jacks the
auction value to $200, and still lists me as the high bidder, because I bid at
least $200, first. If someone else decided they were going to take that clock no
matter what, they could bid $1000, and chances are that no one would top that
bid, but the price would end up getting bid higher, the earlier that Mr. Big
Pockets did that. Therefore, Mr. Big Pockets is better off to wait until just
before the auction ends before he puts in his take-on-all-comers bid, so as to
blindside his competition. Whether that's in the spirit of the rules as far as
on-line auctions is concerned, doesn't matter -  it's completely within the
letter of the rules, and as long as the seller has put a reasonable (to him)
reserve on the item, no one loses (except for the other bidders). What this
means is that if you want something, you gotta be there at the end of the
auction to see how the bidding is progressing, and be ready to put in another
bid.

Theo

Frank Marrone wrote:

> Thanks Seteve and others.  I now see several reasons why the seller may want
> to have a hidden reserve, all valid but debatable.  Nobody has made a case
> for why revealing the reserve "defeats the purpose" of an auction.  That
> assertion was the reason why I asked the original question, I probably
> should have made that clearer.  As far as I can tell from the input on this,
> in it's pure form there are few reasons not to reveal the reserve, it is for
> other tangential reasons like you mentioned that you keep the reserve
> separate.  The best reason I got for concealing the reserve was to prohibit
> people from waiting until the last minute and then placing a bid at reserve.
> In this case the seller looses the benefit of a possible bidding frenzy
> initiated by the first bid.  Assuming the seller placed his reserve at the
> fair value of the item I have only limited sympathy in this case, definitely
> some sympathy though.
>
> Basically I understand that the secret reserve protects the seller in cases
> where the market value is in question.  If the object was fairly priced to
> begin with the reserve need not be secret and it protects the seller from
> selling below market.    The timed auction on eBay has many faults including
> the last minute bid scenario if the reserve is known.
>
> Frank
>
> > Frank Marrone wrote:
> > >
> > > No Comment but a question...  why does it hurt to reveal the
> > reserve price
> > > in an auction?
> > >
> > > Frank
> >
> > Frank,
> >
> > This is a common practice in the auction business. If the seller has
> > grossly underestimated the fair market value, he may get a view that his
> > offering is not in the higher value condition. On the other hand...
>
> <snip>
>
> >
> > My $.02
> >
> > Steve
> >
> >
> > --
> > Steve Laifman        < Find out what is most    >
>
> >                      _/_/_/

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