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Posted By: Tim Newcomb

The actuarial types can weigh in and correct me if I'm wrong, but everything I've read and heard suggests that widespread sniping depresses the final hammer price of auctions -- that's in aggregate, of course, not necessarily on any given auction. This is mostly for the reasons mentioned by other posters-- underbidders driving you up to your max, and so on-- but also for psychological reasons.

Consider this: I see a $50 item of some interest to me (not something I HAVE to have), with three days left and decide to bid on it. If the current bid is at already at $35, I'll tend to bid $36-40, or maybe go ahead and bid my $50 and move on. If the current bid is at $5, I'm very unlikely to bid my $50 limit. I'm much more likely to bid $6 or $7, maybe $10 on it (in other words, the same amount higher in both cases) and then see where it is on closing day, hoping to snipe it for a bargain. This may not be rational, since I know the value of the item in each case. But I do it anyway. The last thing I want to do is a chase an early high bid. When I sell on ebay I'm always delighted when my items attract early bidding.

Finally, all the auction houses have some version of the "6 PM rule"-- you have to place a bid on an item before 6 PM if you want to bid after 6 PM-- this basically prevents hidden sniping and ensures that most lots will have several bids already going into the last few hours. The final frenzy starts from a much higher baseline.

As I understand it, these are basic principles of auctioneering: the more bids you have early, the higher the final price will go. Auctioneers don't want their bidders taking just one shot at the end--they want people on the hook with a bid, emotionally invested, and tempted to go "just one more" increment. Sniping helps remove that temptation to some extent.

Plus the convenience can't be beat. No more incurring the wrath of Significant Other when you jump up from dinner to check that auction. Sure, the snipe will fail to go through once in a while, but very seldom in my experience. I love it!

Tim