The Leon Luckey Type Card Collection – Bidding Ends on Thursday - August 13, 2015

[Peter_Spaeth]

The starting point of our investigation has been the fact that the
authors of existing studies on effects of price partitioning came up
with contradictious findings. Our study was intended to have a
closer look at the mechanisms which underlie price partitioning
effects. The results of our study show that price partitioning leads
to a more favorable evaluation of the total price level, but to a higher
perceived complexity of the price structure and to a higher perceived
manipulative intent of the marketer than does using total
prices. The overall effect of price partitioning on product evaluation
proved to be negative compared to using total prices which is due
to the fact that the negative effects of price partitioning through
perceived complexity of the price structure and manipulative intent
outweigh the positive effect through the evaluation of the total price
level. The contradictious findings of previous studies might be
traced back to the fact that the authors did not analyze all of these
paths. Thus, summing up our results, we can say that marketers
should not use partitioned prices because the disadvantages of this
pricing technique outweigh the advantages. Provided that a marketer
has to use partitioned prices for some reason (e.g. because
partitioned prices are common or regulated by law in his industry),
we can derive from our findings that monetary surcharges should be
preferred over percentage surcharges because when applying monetary
surcharges, prices are perceived as being less complex and the
marketer is supposed to have a lower manipulative intent than in the
case of percentage surcharges.
http://www.acrwebsite.org/volumes/v3...r_vol35_30.pdf

[Econteachert205]

So doesn't that mean they shouldn't use buyers premiums because Morons like me think we're being ripped off by it?

[T206Collector]

Originally Posted by Econteachert205

So doesn't that mean they shouldn't use buyers premiums because Morons like me think we're being ripped off by it?

At the grocery store, yes. But, in the auction market the evidence is to the contrary.

[Econteachert205]

Originally Posted by T206Collector

At the grocery store, yes. But, in the auction market the evidence is to the contrary.

Hahaha. I really think a big part of it is the two worlds of auctions. I have always hung around auctions where a few hundred dollars is a lot of money. Unsophisticated junk dealer types and middle class moms looking for collectibles. I get that at the high end people get what the overall cost is.


By the way, sophisticated investors understand brokerage fees but retail folks sure do not.

[Peter_Spaeth]

One 1988 or whatever it was study of one auction doth not science make. And i see no reason why the newer study wouldn't apply to auctions, buying is buying. In any event, I do not believe that buyer's premiums are charged by sports auction houses with an intent to manipulate the buyer into bidding more. I think it's much more likely a response to a trend which saw auction houses trying to compete by lowering seller's commissions, however irrational that was. Paul if you think otherwise, why don't you name the ones you think are trying to trick us? Or do you think it's all of them, making a conscious choice to try to trick us?

[T206Collector]

Originally Posted by Peter_Spaeth

One 1988 or whatever it was study of one auction doth not science make. And i see no reason why the newer study wouldn't apply to auctions, buying is buying. In any event, I do not believe that buyer's premiums are charged by sports auction houses with an intent to manipulate the buyer into bidding more. I think it's much more likely a response to a trend which saw auction houses trying to compete by lowering seller's commissions, however irrational that was. Paul if you think otherwise, why don't you name the ones you think are trying to trick us? Or do you think it's all of them, making a conscious choice to try to trick us?

Honestly, I view our argument as a waste of time. But, I have enjoyed finding substantial empirical evidence to show the impact of price partitioning, which many of us on Net54 intuitively knew was going on. Frankly, I am not sure why you would take such a strong position to the contrary. I don't get it. But, then, I don't care.

[Peter_Spaeth]

Originally Posted by T206Collector

Honestly, I view our argument as a waste of time. But, I have enjoyed finding substantial empirical evidence to show the impact of price partitioning, which many of us on Net54 intuitively knew was going on. Frankly, I am not sure why you would take such a strong position to the contrary. I don't get it. But, then, I don't care.

For the plain and simple reason that I have more faith in the intelligence of our community than you do. As a result, I do not believe that sports auction houses who understand the intelligence of their market charge buyer's premiums with the intent of tricking people into spending more money. Are you saying that is Leon's intent? Al's? Lee's? They charge BPs after all. In other market segments, notwithstanding the newer research showing it is an unsuccessful strategy, maybe that is the intent. I don't believe it is here. It's just my opinion.

I agree with you the research as a whole is interesting, though.

[T206Collector]

Originally Posted by Peter_Spaeth

For the plain and simple reason that I have more faith in the intelligence of our community than you do.

I've taken part in anchoring surveys with a group of intelligent folk. We all fall for the same tricks every time. It's more of a human nature thing than an intelligence thing.

[T206Collector]

More from the 2009 Morwitz article, which is really fascinating reading:

With respect to eBay strategies...

"While the results varied for high versus low total reserves, across the two products, and across particular CDs and games, in general they demonstrated that auctions with lower opening bids and higher shipping charges attracted more bidders, and generated higher total revenues, compared to higher opening bids and lower shipping charges. For example, setting an opening bid of $0.01 and shipping of $3.99 for CDs resulted in a higher average number of bidders (4.5) and revenue ($10.14) than setting an opening bid of $4.00 and no shipping charges (3.9 bidders, $7.54 average revenue)."

[Peter_Spaeth]

Originally Posted by T206Collector

More from the 2009 Morwitz article, which is really fascinating reading:

With respect to eBay strategies...

"While the results varied for high versus low total reserves, across the two products, and across particular CDs and games, in general they demonstrated that auctions with lower opening bids and higher shipping charges attracted more bidders, and generated higher total revenues, compared to higher opening bids and lower shipping charges. For example, setting an opening bid of $0.01 and shipping of $3.99 for CDs resulted in a higher average number of bidders (4.5) and revenue ($10.14) than setting an opening bid of $4.00 and no shipping charges (3.9 bidders, $7.54 average revenue)."

I would think (or hope anyhow) that the sophistication of people spending hundreds or thousands of dollars in high end sports auctions is a little higher than people buying 10 dollar items on ebay. This thread could prove me wrong though.

[T206Collector]

Originally Posted by Peter_Spaeth

I would think (or hope anyhow) that the sophistication of people spending hundreds or thousands of dollars in high end sports auctions is a little higher than people buying 10 dollar items on ebay. This thread could prove me wrong though.

I wasn't arguing with you. I thought it was an interesting study on ebay auction behavior, since many of us participate in ebay auctions.

As you can probably tell, I enjoy reading about buyer and selling behavior in auction formats since I participate in so many different auctions.

I would guess most auction houses will tell you that they separate the buyer's premium from the hammer price in order to reward their consignors by taxing the buyer. But, there is significant empirical evidence that such practices actually drive final costs up, and that the auction houses are well aware of that. Frankly, enough articles have been written about it to fill a small library.

[T206Collector]

Originally Posted by Peter_Spaeth

The starting point of our investigation has been the fact that the
authors of existing studies on effects of price partitioning came up
with contradictious findings. Our study was intended to have a
closer look at the mechanisms which underlie price partitioning
effects. The results of our study show that price partitioning leads
to a more favorable evaluation of the total price level, but to a higher
perceived complexity of the price structure and to a higher perceived
manipulative intent of the marketer than does using total
prices. The overall effect of price partitioning on product evaluation
proved to be negative compared to using total prices which is due
to the fact that the negative effects of price partitioning through
perceived complexity of the price structure and manipulative intent
outweigh the positive effect through the evaluation of the total price
level. The contradictious findings of previous studies might be
traced back to the fact that the authors did not analyze all of these
paths. Thus, summing up our results, we can say that marketers
should not use partitioned prices because the disadvantages of this
pricing technique outweigh the advantages. Provided that a marketer
has to use partitioned prices for some reason (e.g. because
partitioned prices are common or regulated by law in his industry),
we can derive from our findings that monetary surcharges should be
preferred over percentage surcharges because when applying monetary
surcharges, prices are perceived as being less complex and the
marketer is supposed to have a lower manipulative intent than in the
case of percentage surcharges.
http://www.acrwebsite.org/volumes/v3...r_vol35_30.pdf

I agree, of course, that "the marketer is supposed to have a lower manipulative intent than in the case of percentage surcharges," but I was talking about using partitioned pricing in the auction environment. The Morwitz study cited above referenced an auction study. Whether partitioned pricing has a negative effect on the market in most other contexts is irrelevant. Frankly, if partitioned pricing worked in the grocery store then what you would see would be buyer's premium's at checkout! Imagine that!

[chernieto]

Originally Posted by Peter_Spaeth

http://www.acrwebsite.org/volumes/v3...r_vol35_30.pdf

please make it stop.jpg


& Congrats to Leon on the auction as well ( and the bidders).

Paul