eBay auctions give “buying time” new meaning
Do you want the new iPhone 6? Do you hate waiting in lines? Are you willing to drop some extra cash? If you answered “yes” to the above questions, you might want to check out the iPhone 6 auctions on eBay.
An interesting internet phenomenon has been transpiring on eBay’s auction site around the release dates of the iPhone 6 and iPhone 6 Plus. With the anticipated release comes a lot of interested buyers and, consequently, long lines in front of the Apple store. Because of the high demand, some customers have even resorted to camping out in front of stores overnight in hopes of getting a little closer to the front of the line when stores opened on September 19th. Others are looking for other methods ofattain the new iPhone without waiting in lines: eBay auctions. Scalpers are auctioning iPhones on eBay, usually preordered online, for a markup of about 50-60%. For an unlocked phone, that totals to about $1,500. Some bids have even gone to as high as $3,050, more than 200% more than the retail price.
eBay has been the platform for many online auctions since its launch in 1995. The online auction center mainly uses “proxy bidding” and allows eBay users to bid on items in real time. Proxy bid is an implementation of the second-price auction, in which the player pays the price of the second-highest bid plus a defined increment. Proxy bids are not sealed and the “second-highest bid” is always displayed on the page of the item. In addition, the price paid is determined by the competitor’s bids and each player can only submit his/her bid once: an “economically rational” highest price they are willing to pay. This is an interesting spin on the second-price sealed-bid auctions studied in class, as the essential difference is that players can see what they would currently have to bid to win but must also consider if their bid is high enough so that it is not succeeded by later bidders. Bidders who place bids early on in an auction have a strong disadvantage if they do not have a good understanding of how much others are willing to pay for the item. It seems that in a proxy bid, the best approach is also to bid one’s true value when considering payoffs. In the situation of bidding for “saved time,” as the case of the iPhone 6, however, it becomes hard to measure the true value. Also in consideration are other reasons one might want the new iPhone immediately, such as obtaining the trendy new gadget before everyone else does.
Proxy bidding and other online auctions offer new ideas in the study of auction theory. In addition, with continuing rise in popularity of e-commerce sites such as eBay, Amazon, and Alibaba, one can’t help but wonder whether auctions held online provide different seller/buyer actions and expected outcomes than those held in a traditional auction room.
Sources: http://www.cnet.com/news/want-an-iphone-6-without-the-wait-heres-how-much-itll-cost-you/
http://www.ebay.com/itm/Unlocked-Gold-iPhone-6-Plus-128GB-X-2-Worldwide-Shipping-Proof-Of-Purchase-/151409355981?
http://www.ebay.com/gds/Finally-Understand-eBays-Proxy-Bidding-/10000000002634767/g.html