Shill Bidding

[nat]

So there are a few different things you might be trying to do with shill bids:

(1) You might be trying to ensure that your item sells for your minimally acceptable price.

(2) You might be trying to squeeze every dollar out of bidders.

If (1), it seems to be unnecessary. Just start bidding at the lowest price that you'd take. It'll knock out some bidders, but those bidders wouldn't have stuck around in a shilled auction either.

It's (2) where shilling plays a role, and is pretty unambiguously ethically problematic. One reason that it's ethically problematic is that it sends a signal to bidders that there is a market for this card, when, in fact, there isn't. It's a kind of deception. Another related reason is that bidders are participating in what they reasonably believe to be an honest auction, when it's not that at all. (Both problems could be fixed if the auction house announced ahead of time that shill bidders are going to participate in this auction. But of course that's not going to happen.)

In any case, I sure hope that auction houses make shillers who win their own items pay the full price (including BP), and send them a check for their share of the sale, which then needs to be reported in income taxes. If shilling could cost you 30-60% of the value of the item (depending on your tax bracket and local and state tax rates), that at least is some incentive to not do it.

EBay is a different animal, because the seller can just cancel the auction if it looks like they are likely to win their own card. Is there any mechanism to discourage this? Can the high bidder leave negative feedback if an auction they participate in is canceled?