Myth # 1: The highest bid always wins.
Wait a second! Why would someone bid the same amount as another eBayer? Thanks to eBay’s proxy bidding system, you don’t really know what the other buyers’ highest bids are, so it’s quite easy to bid the same amount as another participant. In case of ties, the earliest bid wins. If you’re confused, just follow this scenario:
1.You find a rare Michael Dukakis Pez dispenser you need to complete your collection in an auction with five days to run, and with no bids placed to date. The opening bid price is $9.95, but this particular item is worth a lot more to you, so you bid $100.00 for it.
2.Thanks to eBay’s proxy bidding system, eBay enters a bid of $9.95 for you. You’re the high bidder!
3.Over the course of the next few days, others place their own bids, all of them less than your initial $100 bid. The proxy bidding system works as it is supposed to, and each time someone bids against you, eBay enters a new bid on your behalf that’s one increment higher than the last bid. The price gradually inches upward, to $21.25, $35.50, $75.15, and, on the last day, to $92.50. You remain as the high bidder throughout.
4.Then, with only a few hours left to go, someone outbids you! The price has shot up to $102.50, and you’re no longer the high bidder. You’re aghast at the thought of this rare Dukakis Pez dispenser slipping from your grasp, and you realize that it’s actually worth more than $100 to you. You’d pay as much as $110.00.
5.You type in a bid for $110.00 and submit it with two minutes left in the auction.
6.The auction closes, and, sure enough, the final price is $110.00, but you didn’t win. What happened?
If you click on the History link on the auction page to view the bids, you’ll find that the other bidder also bid $110.00, but placed that bid a minute and a half before you did. That submission topped your original $100.00, and moved the price up by the next increment, to $102.50. However, the interloper’s $110.00 proxy bid was still in place. When you bid $110.00, the price increased to the maximum, and that’s what the auction closed at. But because your high bid was placed after the other one, you lost the auction.
I’m going to show you how to reduce the chances of this tragedy occurring with the next myth.