An eBay Auction and Political Banter
Sources: http://www.cnn.com/2015/10/07/politics/rand-paul-hillary-clinton-book-auction-ebay/ and http://offer.ebay.com/ws/eBayISAPI.dll?ViewBids&item=231713581239&rt=nc&_trksid=p2047675.l2565
In a tongue-in-cheek way to describe her accomplishments as Secretary of State to her Republican opponents, Hilary Clinton sent them a signed copy of her new autobiography. Rand Paul then proceeded to auction off that book on eBay, promoting it through his online store with the phrase “GET YOUR OWN SIGNED COPY OF A GREAT FICTION BOOK!”
Rand Paul placed the book, which was signed by both him and Clinton, on a 3-day eBay auction. The book was auctioned through the Rand Paul 2016 Store which takes proceeds as contributions towards Rand Paul’s campaign. It sold for $13,100 after 89 bids.
Since normal eBay auctions follow the style of the English auction, the dominant strategy is to stay in the auction until your value for the item is reached. If you bid less than your value, and someone outbids you for less than your value, you will lose the auction even though you were willing to pay more. If you bid more than your value, you may win the auction but you would have paid more than you thought the item was worth. It seems that many of the eBay users followed the strategy of bidding their true values since many utilized automatic bidding for this auction. This means that each selected a value that they would be willing to pay for the item and allowed the system to bid for them. If their bids were topped by other bidders, the system would increment their bids accordingly until their respective values were reached. The winner of this auction had indeed used automatic bidding.
It is also interesting to note that most bidders’ values for the book would have been influenced by their dedication to the Rand Paul campaign since proceeds from this auction support his campaign for presidency. Their valuation of the book would have also been influenced by the fact that it has been signed by both Rand Paul and Hilary Clinton. Due to these factors, the bidding went from a starting price of $250 to an incredible $13,100.