ok Lawyers- Is shill bidding illegal?

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Posted By: Joann

The difference between shilling and reserves is in when the seller makes his pricing decisions.

For reserves - both hidden and not hidden - the seller has to decide ahead of time what he wants to get for the item. It is something he has conceived before any buyer is on the scene. So the deal is basically set from the start.

For shilling, the seller doesn't have to decide or even know until the action is well underway. Shilling is an opportunistic and situational activity - the seller reads the bidding action and responds to bump prices up to whatever level he dares - regardless of what he may have been willing to take when the auction started.

It's fair to allow a seller to pre-set a minimum level at which he is willing to sell, but to allow him to try to bump the price around when there is active bidding underway to whatever he thinks he can get seems less fair. A reserve feels like "get what I think is fair". Shilling feels like "take everything I can from this person".

But despite that, I agree with Paul on this one. If something is worth X to you and you spend X, or X-Y or wherever you end up, there is an argument that you got what you wanted. Suppose someone is selling a certain car for $20K, and I am looking for the same car and willing to pay $30K. If the seller knows I'm coming to look at his car and gets wind that my price is $30K so he tells me the price is $30K and I pay it, there is only a certain extent to which I can hold him responsible for finding out my price and extracting it. There is an instinct to think that he somehow ripped you off - that anyone did when you find something you just bought was available for cheaper somewhere else - but the fact is that your willingness to pay X for it was the cornerstone of the final price.

Don't like it either way, but I understand Paul's point.

J