October 30, 2006
Automated sniping
Anyone who has used eBay for any length of time knows of the notorious practice of "sniping", or placing a bit in the last few minutes/seconds of an auction, hoping to secure the price before anyone else has a chance to react. Sniping is variously loved and hated, depending on whether or not you benefit from it or not.
At first, sniping seems to controvert the auction process by making bid prices earlier than a few hours before the end of the auction pretty much useless as far as guessing at the final item price. But in principle, sniping makes a lot of sense, and the marketplace has evolved to accommodate it. There are plenty of high-ticket items that start at $0.01, and no one expects for them to sell at a fraction of their value. Additionally, by only entering one bid very late in the process, one can not only improve one's chances of winning, but reduce the final selling price by keeping bid wars to a minimum.
Now there's an automated auction sniper called "Bidnapper", a service that will, for a fee, automatically snipe auctions of your choosing at your preferred price. Granted, unless you do a pretty decent amount of eBay-ing it's not going to be worth it (a year costs $46.95), but if you do, it looks like a pretty good idea.
The site makes an argument that sellers like auction snipers because they tend to be more serious than people who enter a screwball bid a week before the auction ends. While this may have a certain truth to it, I would imaging that the deflationary pressure snipers exert on the auction system would outweigh any potential benefit in reliability. But ultimately, sniping is the most effective way of participating in an auction and if you use eBay enough, a service like this one makes a lot of sense.
Cool, I'll have to check that service out. I snipe when I know I'm going to be around, but often forget to set a reminder. Other times I just enter my max bid price early on and end up winning the auction. I would probably snipe less if it weren't for shill bidding.
Posted by: Scott at October 30, 2006 12:32 PMThe thing is, if everyone always entered their actual maximum bid for Ebay's auto-bidder, the sniping shouldn't ever make a difference. The key, I suppose, is that bidders often end up bidding more than they planned after they get outbid.
Posted by: nick at October 30, 2006 12:40 PMnick: I agree in theory. If people just put in their maximum bid and leave it at that, they've no reason to complain if they lose. But practically, it doesn't work that way. People bid lower than they're actually prepared to pay, and then can easily wind up bidding more than they think they're prepared to pay because they get outbid. This is great for sellers, but bad for bidders.
On one hand, auctions are the most transparent way of the market determining prices. On the other, it introduces an element of competition which adds an irrational aspect to the proceedings that can give counterintuitive results.
Sniping seems to eliminate a lot of these oddities.
Posted by: ryan at October 30, 2006 12:53 PMRight. If everyone practiced sniping, then it'd be exactly like everyone entering their true highest bid from the beginning. It simply eliminates the irrational impulse to bid more because of the excitement of back-and-forth bidding.
Of course, I'm sure many people enjoy the bid wars (rather than simply giving their highest bid from the beginning).
One of the keys to an auction is that you can always be tempted to add "one dollar more" to your bid. And if everyone keeps thinking that way, the bid price will be higher than anyone planned. Sniping gets rid of that, which sorta makes it no longer an auction. Then it's just a blind "best offer."
Posted by: nick at October 30, 2006 1:21 PM