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[OM] Ebay and reserve prices

Subject: [OM] Ebay and reserve prices
From: Andrew Dacey <frugal@xxxxxxxxxxxxxxx>
Date: Thu, 15 Mar 2001 22:44:43 -0400
Here's a thought that I had about Ebay's reserve prices that doesn't
seem to be answered in their docs. I figure someone here will probably
know the answer.

Suppose there's an item with a starting price of $1.00 and a reserve
price of $50.00. cheapbidder puts a pid in for $25.00. Obviously, that's
his maximum bid, so being the first bidder the current bid is at $1.00
and the reserve price isn't met yet. Now then, if I come along and put
in a bid for $60.00, I will automatically outbid cheapbidder and the
current bid will be at $26.00 (assuming a $1.00 bid increment) with the
reserve not yet met. Now here's my question, suppose that's all the bids
the item gets before the auction ends, will I get the item? It would
make sense for Ebay's system to compare the current high bidder's max
price with that of the reserve price and, if the bidder's price is high
enough, place an appropriate bid at the end of the auction to meet the
reserve price. That would be the logical way to handle this situation.
The seller has said, "I won't sell this item for less than $50.00" and
I've said, "I won't buy this item for more than $60.00". However, I also
have had enough experience with Ebay to know better than to expect this
type of automatic action. So, what happens? Does my bid automatically
get raised to $50.00 (which is still less than my maximum price) in
order to meet the reserve or does the auction end with the reserve price
not yet met?

If it won't automatically raise the bid, then this seems like a crucial
flaw in the design of Ebay that could mean that a reserve auction
wouldn't sell, even though there's a buyer willing to pay the reserve
price and who has placed a bid on the item.

-- 
Andrew "Frugal" Dacey,
frugal@xxxxxxxxxxxxxxx
http://www.tildefrugal.net/

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