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Wednesday, July 11, 2007

e-Bay, the Other White Meat

True confessions time - let’s see a show of hands. How many of you have done this? Who has helped increase the price of a friend’s item on e-Bay by bidding it up without the intention of actually buying it, or had someone else do this for you? That’s what I thought! They frown on that, you know. They would probably also frown on another game I have stumbled upon, which I’ll call e-Bay Chicken. What I have greatly enjoyed doing lately, for reasons I will attempt to explain, is bidding up the price of items I don’t necessarily even want, being sold by people I don’t know.

One peculiar aspect of e-Bay that I’ve noticed is that people will bid prices to above retail, even for used items. I noticed this soon after I started using e-Bay in the late 90’s, but figured people would get smart and quit doing it, particularly now when you can buy just about anything online, and usually for better than retail prices. Not so. People still do it all the time. Maybe some clever psychologist can do a Ph.D. thesis on this.

If you’re an experienced e-Bay user you probably already know this, so you can skip this paragraph. e-Bay is not like an in-person auction where an auctioneer takes bids serially from you and your fellow bidders that you can see in person, until the highest bidder prevails. Instead, you enter the maximum amount you’re willing to bid, and the price ratchets up to the next increment above the next higher bidder’s max. For example, if you are bidding on a Richard Simmons Sweatin’ to the Oldies DVD and you enter a maximum bid of $200, and the next highest bidder’s max is $150, then you are the winning bidder at $151. If no more bids are entered, you’ll win the auction and pay $151 (plus s/h). (Before I realized how this works, I used to wonder, “how did I get outbid so quickly?”). If someone else were to come along and bid $160, then you’d still be the winning bidder, but the purchase price would be raised to $161. Get it? If someone else really really wants the DVD, he’ll keep bidding until he’s the winning bidder, which occurs when his max bid exceeds $200.

An economic theory of mine is that the reason we in the US enjoy a strong economy and high standard of living is that we buy lots of things we don’t need, and pay too much for them. On the other hand, my personal economic philosophy is a combination of non- or even anti-materialism, and responsible spending; I’m not avowing asceticism, but I always keeping a close eye on what I buy and own, and always look for the best deal on anything that costs more than $20.

I’ve long held that if everybody thought the way I did, our economy would quickly grind to a halt. Of course I’m aware of the subtle hypocrisy here, how I depend on others being spendthrifts in order to live well and still feed my inner cheapskate. This conflict is what I believe motivates my enjoyment of e-Bay Chicken:

I start by looking at items on e-Bay that I wouldn’t mind owning (because I just might), such as certain tools or sporting goods. I then look at the bid history and other parameters. If there is some time left in the auction, and it looks like there is active bidding on the item, I’ll throw my hat in the ring and bid just higher than the current highest bidder. Small success is when I can raise the bid to the next increment without making myself the highest bidder. Real success is when I can get the current winning bid over e-tail prices without owning it. The risk of course is becoming the high bidder, and having to wait on pins and needles for someone else to come and outbid me. Failure is remaining the high bidder at the end of the auction and having to buy the item that I don’t really want at a price I’ve personally inflated.

So… does anybody else play this little game, or am I, once again, out here on my own little limb?

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