The Psychology of Bidding.......

barrysloate · #1 04-18-2014, 05:42 AM

Since I ran auctions for many years, let me respond to a few of the issues brought up here.

First, I know some bidders feel a 10% increment is too high, and would prefer to be able to raise a bid 2% or 5%, more like we can do on ebay. What they fail to realize is it makes it just as easy for that other bidder to top you. So you may not like to raise a bid 10%, but it might just be enough to knock out the competition and win you the lot. If you could raise it 2%, the next guy would have no trouble topping you also.

And with regard to alternate increments only on ceiling bids, I agree completely with REA's system. As an auctioneer, you never want to have a situation where two bidders are tied at the same bid. You especially don't want to have a tie for the winning bid. Here's why: only one of them can win the lot. When you tell the winning bidder he won, he always thanks you and tells you what a fair system it is. And then, when you tell the other guy he lost, he screams and yells and tells you he doesn't understand and promises he won't be bidding with you again. It's a terrible situation for an auctioneer, so it's imperative to have a system where nobody can be tied for the same bid.

Stonepony · #2 04-18-2014, 06:53 AM

Quote:

Originally Posted by barrysloate

Since I ran auctions for many years, let me respond to a few of the issues brought up here.

First, I know some bidders feel a 10% increment is too high, and would prefer to be able to raise a bid 2% or 5%, more like we can do on ebay. What they fail to realize is it makes it just as easy for that other bidder to top you. So you may not like to raise a bid 10%, but it might just be enough to knock out the competition and win you the lot. If you could raise it 2%, the next guy would have no trouble topping you also.

And with regard to alternate increments only on ceiling bids, I agree completely with REA's system. As an auctioneer, you never want to have a situation where two bidders are tied at the same bid. You especially don't want to have a tie for the winning bid. Here's why: only one of them can win the lot. When you tell the winning bidder he won, he always thanks you and tells you what a fair system it is. And then, when you tell the other guy he lost, he screams and yells and tells you he doesn't understand and promises he won't be bidding with you again. It's a terrible situation for an auctioneer, so it's imperative to have a system where nobody can be tied for the same bid.

I disagree with this. On a current $3000 lot , if my top is $3200... I can't bid it. I lose and Consignor loses if no one bids the required $3300. Your statement that it's "easier" for lower increment bids to be topped is obvious... But irrelevant. The bottom line is I believe people are missing out in desired lots, and money is being left on table with large increment jumps.

barrysloate · #3 04-18-2014, 08:09 AM

Quote:

Originally Posted by Stonepony

I disagree with this. On a current $3000 lot , if my top is $3200... I can't bid it. I lose and Consignor loses if no one bids the required $3300. Your statement that it's "easier" for lower increment bids to be topped is obvious... But irrelevant. The bottom line is I believe people are missing out in desired lots, and money is being left on table with large increment jumps.

But all the auction houses have software which is preset at 10%, or some other standard increment. So the next one after $3000 is usually $3300. What if you only wanted to bid $3165 on top of a $3000? How could the software accept it? Some actually use increments other than 10%. For example, from $1000 to $2400, the limit might be $100. So from $2200 to $2300, the increase is more like 5%. But at $2500, a $250 increment kicks in. Again, everything is preset, I don't know how the software designer can anticipate every increment that bidders may want to place.

Ebay allows you to type in any bid you want, including pennies if you so desire. But auction house increments are predetermined.

Stonepony · #4 04-18-2014, 08:21 AM

I have no answers. Just seems there's a lot of room above a $5000 bid before the 10% increment of $5500

ullmandds · #5 04-18-2014, 08:28 AM

I too agree that AH's are missing out by having such high % bidding increments...less bidders ultimately make it to overtime bidding(with some houses)...and for people like me who bid impulsively and sometimes under the influence...I'd be more apt to bid with smaller jumps!

barrysloate · #6 04-18-2014, 08:42 AM

Dave and Pete,
Keep in mind that auction houses all have extended bidding. Under the current system, most end between two and four in the morning. The one thing that would make them even longer is smaller bidding increments, because it would take more bids for lots to reach their max. If you want to have 5% increases across the board, expect the larger auctions to end sometime in the middle of the next day. It's not practical.

That said, not all use the 10% increment. REA is one of them. The increases range anywhere from 4% to 10%, depending on where you are in the bidding. It's a balancing act to find what increments work the best. And please keep in mind when we have threads about the best ways to end auctions, there is absolutely no consensus of opinion. So there is simply no way to make everyone happy.

Leon · #7 04-18-2014, 08:44 AM

Quote:

Originally Posted by barrysloate

Dave and Pete,
........ So there is simply no way to make everyone happy.

I wholeheartedly concur!!

Bocabirdman · #8 04-23-2014, 02:32 PM

Quote:

Originally Posted by Stonepony

I have no answers. Just seems there's a lot of room above a $5000 bid before the 10% increment of $5500

Using these variables, a fixed bid increment will either cost the consignor money or it will create ill will from a bidder who bids in a moment of weakness. Would it be too much to turn off incremental bidding for the last 60 minutes and go with an "Any Advance?" format? If the Auction House uses the Extended Bidding, then turn it off for that period. Using a "IF >" filter would seem an easy programming adjustment. The auction programs already increase the bid increment at pre-determined values. They surely could have it decrease.

glchen · #9 04-23-2014, 03:05 PM

Quote:

Originally Posted by Bocabirdman

Using these variables, a fixed bid increment will either cost the consignor money or it will create ill will from a bidder who bids in a moment of weakness. Would it be too much to turn off incremental bidding for the last 60 minutes and go with an "Any Advance?" format? If the Auction House uses the Extended Bidding, then turn it off for that period. Using a "IF >" filter would seem an easy programming adjustment. The auction programs already increase the bid increment at pre-determined values. They surely could have it decrease.

If this happened in REA, the auction would never end.

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