| quote | Originally posted by Oreif:
OK, I finally figured it out.Seller: $50 opening price.
Bidder 1: Bids $200 max Price is $50
Bidder 2: Bids $200 max
So the auction would go:
Bidder 2 bids $100 ($50 increment)
Bidder 1 would then be $150
Bidder 2 would then advance to $200
Since bidder 2 bid $200 first and bidder 1 can't increment higher, bidder 2 is the winner. |
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That's basically it. Let me explain a little bit further and also try to explain why I chose for this mechanism. Bidding is at $50 (not the opening bid).
Bid Increment is $10.
Buyer A sets maximum bid to $100:
Autobid bids $60 on behalf of Buyer A ($50+$10) Buyer B comes along and also sets maximum bid at $100:
1) Auto Bid bids $70 on behalf of Buyer B, which is not enough because Buyer A's maximum bid can still outbid that.
2) Auto Bid bids $80 on behalf of Buyer B, which is not enough because Buyer A's maximum bid can still outbid that.
3) Auto Bid bids $90 on behalf of Buyer B, which is not enough because Buyer A's maximum bid can still outbid that.
4) Auto Bid bids $100 on behalf of Buyer B. Auto Bid will now stop bidding because Buyer A's maximum bid can't outbid this. Buyer B is now the highest bidder. There are several reasons I chose for this mechanism (and not for the way eBay works, where Buyer A would still be the highest bidder): First of all, Buyer A is at a tremendous advantage, because if nobody bids on the item, he will be the winner for a price much lower than what he was willing to pay for it. If any new bidder comes along and bids below his maximum bid (taking the bid increment in consideration), he will still be the winner. Now the price for this advantage is that he will not have the highest bid if someone comes along and makes the same maximum bid. Which, IMO, is only fair. Consider this conversation (as I explained it in email to someone): Buyer A: "Hey! Nice stuff! I'll give you $20 for it!"
Buyer B: "Well, I'll give him $30 for it."
Buyer A: "Oh wait, I'll give him $30 also." Now who should get it for $30?  Now the alternative would be something like this: Buyer A: "Hey, I'll give you $30 for it, unless nobody else wants it, then I'll only give you $20"
Buyer B: "I'll give him $30 for it"
Buyer A: "I was first with $30, so I should get it!" That just isn't fair. Auto Bid enables you to get an item for far less than you are actually willing to pay for it. But the risk is that somebody else actually buys it at that price. [This message has been edited by Cliff Pennock (edited 01-14-2002).]
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