Auction Question - Silent or Secret Reserves?

[Exhibitman]

The cynic in me would respond that many auctions already have hidden reserves--shilled bids.

As to whether true hidden reserves are ethical, if they are in conformity with the law they are ethical as far as I am concerned. The issue is whether they are legal, and that depends on the state law where the auctioneer is located, as does the manner in which a reserve must be stated, used, etc.

Assuming they are legal, there are reasons not to state the reserve and not to start the items at the reserve. If the reserve is not known or stated, or is bid in at the end of the auction (as Heritage does), it encourages people to bid. It also lets the auctioneer and consignor gauge where the true strength is on the item, which may lead to a post-auction sale if the consignor is interested in waiving the reserve and the bidder remains interested in the item.

I am in a minority here as I do not let the presence of a reserve affect my bidding--I bid what I want to pay and do not try to outthink the auction. Not because I have any special insight: I'm just lazy.