Ebay and Second Price Auctions
EBay and Second Price Auctions
This is an article that explores the concepts of second price auctions in a real life scenario. In class we studied sealed second price auctions which meant that you had to bid independently from other bidders and had no knowledge of their bids. We determined that in sealed second price auctions it would be beneficial to bid your true value, however Ebay is not a sealed auction. You get to see other people’s bids as the auction goes on. This article goes into depth about the certain strategies that should be used when bidding on items. If you want to win the auction you should wait until the very last second and place a bid above the current one as long as that bid is still at or below your true value. This increases the odds of winning the auction with a larger positive payoff. The article also advocates speculation if you are in the market for reselling and know that there is a limited buying audience. If you know there is someone with a significantly higher value for an item than you, you can purchase the item in an auction for above your true value, but below theirs, in hopes of reselling to make a positive payoff.