Did I miss out?

[msb]

I was outbid by $5 on this chip set. I considered putting up another bid, but hesitated... not really sure of their quality. Did I make a mistake?

[SamIAm]

Aw, come on! I thought poker players would be better at Game Theory. 2nd-Bid Auctions were designed so that the optimal strategy is to bid the value of the item (to you). Here's an example.

Let's say an item is worth $100 to you. I'll look at three strategies: Bidding $99, bidding $100, and bidding $101. I'll prove that bidding $100 gives you the best outcome.

What if you bid $101? If the 2nd bid is well below (like $99) then you'll pay the same as if you had bid $100. ($99) Great. What if somebody out-bids you, like they bid $102? Then you still won't get the item, just as if you had bid $100. So far bidding $101 and bidding $100 are the same. The only difference occurs when somebody bids $100.50. Now you'll win the item, but pay more than it's worth to you. You lose.

Hence bidding over the value is inferior to bidding the value. (You knew that already.)

Now let's look at bidding $99 for an item that's worth $100 to you. Again, if you're underbid (somebody bids $98) you pay the same as if you had bid $100. If you're well overbid (like $101) then you don't win the item, just as if you had bid $100. So far bidding $99 and bidding $100 are the same. The only difference occurs when somebody bids $99.50. Now you WON'T win the item, even though you'd be happy to pay $99.50 for it. You lose.

Hence bidding under the value is inferior to bidding the value. This is what nobody seems to know. You should never utter the phrase "I considered making another bid." There's no reason to change your bid based on your opponent's actions. As soon as you place a second bid, you're behaving irrationally. Optimal strategy is to decide what the item's worth to you, and then find out in a week if anybody values the item more than you do. Sniping at the last minute has no value against a rational player, because they're already CONSIDERED the idea of being out-bid, and don't need the emotional response about "the one that got away".

Sorry, I know this isn't the forum for strategy decisions. Just seemed proper eBay strategy was appropriate for this forum especially.
-Sam

[TenPercenter]

[ QUOTE ]
Aw, come on! I thought poker players would be better at Game Theory. 2nd-Bid Auctions were designed so that the optimal strategy is to bid the value of the item (to you). Here's an example.

Let's say an item is worth $100 to you. I'll look at three strategies: Bidding $99, bidding $100, and bidding $101. I'll prove that bidding $100 gives you the best outcome.

What if you bid $101? If the 2nd bid is well below (like $99) then you'll pay the same as if you had bid $100. ($99) Great. What if somebody out-bids you, like they bid $102? Then you still won't get the item, just as if you had bid $100. So far bidding $101 and bidding $100 are the same. The only difference occurs when somebody bids $100.50. Now you'll win the item, but pay more than it's worth to you. You lose.

Hence bidding over the value is inferior to bidding the value. (You knew that already.)

Now let's look at bidding $99 for an item that's worth $100 to you. Again, if you're underbid (somebody bids $98) you pay the same as if you had bid $100. If you're well overbid (like $101) then you don't win the item, just as if you had bid $100. So far bidding $99 and bidding $100 are the same. The only difference occurs when somebody bids $99.50. Now you WON'T win the item, even though you'd be happy to pay $99.50 for it. You lose.

Hence bidding under the value is inferior to bidding the value. This is what nobody seems to know. You should never utter the phrase "I considered making another bid." There's no reason to change your bid based on your opponent's actions. As soon as you place a second bid, you're behaving irrationally. Optimal strategy is to decide what the item's worth to you, and then find out in a week if anybody values the item more than you do. Sniping at the last minute has no value against a rational player, because they're already CONSIDERED the idea of being out-bid, and don't need the emotional response about "the one that got away".

Sorry, I know this isn't the forum for strategy decisions. Just seemed proper eBay strategy was appropriate for this forum especially.
-Sam

[/ QUOTE ]

Ok, can you repeat that please?

[img]/images/graemlins/smile.gif[/img]

Ten





p.s. : Or use a snipe program?

[Lottery Larry]

I'm not an eBay person- did I miss why trying to get something that you want, cheaper than what's you're willing to pay for it, is INFERIOR strategy?

You have to be prepared for a last-second loss, but if you set a hard cap on your final bid, you can take the chance that you might get away with it... can't you?

Or does eBay "sniping"- which I assume is last-minute steal bidding- move too quickly to make this a viable strategy?

[TenPercenter]

I completely agree with you.

And I like sniping. It serves the purpose of bidding EXACTLY your max price, but waiting until the last second so as NOT to bring out the irrational bidding frenzy of a competitor. I love my HammerSnipe.


Ten

[SamIAm]

[ QUOTE ]
I'm not an eBay person- did I miss why trying to get something that you want, cheaper than what's you're willing to pay for it, is INFERIOR strategy?

[/ QUOTE ]
You don't pay more by bidding more. The way second-bid auctions work is that whoever has the highest bid wins the item and pays the second highest bid. So, if I bid $90 for the item and you bid $80, I'll win the item for $80. If I bid $100 for the item and you bid $80, I'll still win the item for $80.

Bidding your value never costs you savings. It only matters when somebody manages to bid in the gap between your value and your bid. When they do that, you lose.

I agree that if you're going to bid your value, you might as well use a sniping service (if the service was free). There are irrational OPPONENTS that say "Ooh, I was outbid. Suddenly my evaluation of that item has changed. (I'm irrational.)"

On the other hand, if you ever bid twice on the same item, you need to think more about your bidding. If I'm in a $10/$20 game and I decide that my value in the pot is $18 and the bet's $20, I fold. I don't say "Ooh. I was in that pot and really don't want to lose it."
-Sam

[Slow Play Ray]

They're Blue Chip. In my personal opinion, you're lucky you got outbid.

[Lottery Larry]

Okay, thanks for the information.

Now, how likely is it that bidding your value early WILL trigger irrational bidding wars in several "opponents" ? Or doesn't that happen enough?

[TenPercenter]

[ QUOTE ]
Okay, thanks for the information.

Now, how likely is it that bidding your value early WILL trigger irrational bidding wars in several "opponents" ? Or doesn't that happen enough?

[/ QUOTE ]

I personally see it happen all the time. I have tried and tried to get my Mom (an avid ebayer) to use sniping. She is the exact type of person that will bid her value, then see that she's outbid, and bid again just because she doesn't want to lose.

My wife did the same thing on some tiny baby item yesterday. I saw her get upset that her bid was outbid, and she put in another one.

You have to admit that not all (not many!) people are rational when it comes to buying, especially when it's a "race" (proxy auction) with immediate visible results.

Ten

[msb]

SamIAm,

I appreciate the response (really), but I guess what I was really trying to figure out was my $400 valuation for the set too low?

When I said I was considering a second bid, what I really meant was that upon further consideration, perhaps my $400 top bid was a bit low for the quality of the set. I would have gladly paid $450 if I knew I would have a hard time finding a similar set for any less.

I also considered posting here while the auction was still running to see if anybody knew those chips... but I was afraid I might be inviting more bidders into the fray [img]/images/graemlins/wink.gif[/img].