The fact that the maximum bid is revealed when it is outbid introduces the possibility of maximum bid fishing. In proxy bidding, the wise bidder must know in advance the "true" value of an item as a basis for their secret bidding limit. The auctioneer does not disclose the current maximum bid, but the second highest bid is always public. Many online auctions use proxy bidding, an iterative sealed bid auction where winners pay a fixed increment over the second highest bid. In this case, more-informed buyers may delay bidding until the last minutes of the auction to avoid creating competition for their bids, leading to a lower winning bid.Īn analysis of actual winning bids on eBay suggests that winning bidders are more likely to have placed a single bid late in the auction, rather than to have placed multiple incremental bids as the auction progresses.
it is possible to gain additional information about the "true" value of the item by inspecting previous bids įor example, a novice antiques buyer may prefer to bid in auctions which already have bids placed by more experienced antiques buyers, on the grounds that the items which the experienced buyers are interested in are more likely to be valuable.
One economic analysis of sniping suggests that sniping is a rational gain-maximizing (in other words, price-minimizing) strategy for bidders in auctions that fulfill two criteria: Online services claim that their use decreases the failure rate of the snipe, because they have more reliable servers and a faster Internet connection with less variation in latency, allowing the bid to more reliably be placed close to the deadline.Įxperienced bidders on online auctions with fixed ending-times often prefer entering bids late in the auction to avoid bidding wars (multiple rounds of bidders each increasing their maximum bid to temporarily regain "current highest bid" status) or bid chasing (where the presence of an existing bid encourages others to bid on the same item). 1.4 Simultaneous bidding, without potentially winning multiple bids.
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