garth,
thanks for taking the time and effort to explain this to me, and to a neophyte
this
is definitely not simple. so if i am reading it right, the idea in all the
bidding,
if you are a buyer is to bid high enough that no one will out bid you but not
overshoot the reserve price and as a seller, is to determine a reserve price
that
is high enough to satisfy your needs but low enough that someone will bid above
it.
right? interesting game people play!!! now i understand!!! or do i? what
happens
if, taking your example, someone bids higher than $35 but lower than $175? what
happens to the price that you will pay. lets say that someone made a bid of
$100,
what happens your bid? i think i still have a few things to learn here. thanks
for
the explanation but i think i will pass for now!!
francis
Garth Wood wrote:
> At 04:16 PM 5/27/98 -0400, Francis wrote:
> >
> > lee,
> >
> > have just been monitoring the messages from the newsgroup. but this time you
> > have me confused. i have never bid on anything before so i don't know the
> > mechanics of this. first of all, what is the reserve amount and who
> > determines it? next, what is the function of the reserve amount?
>
> Francis (and Winsor):
>
> Actually, it's quite simple.
>
> Assume you wish to auction off item X on eBay, and that you wish to guarantee
> that you either (a) get a minimum amount of money for the item or (b) if you
> fail to get the minimum amount of money from various bids, you will not be
> required to sell the item at the last "inadequate" bid you received before the
> auction's over.
>
> Okay, so you place item "X" on auction, with a reserve bid of $200.00 for the
> item. The key here is that the reserve price is known ONLY TO YOU (and the
> eBay bidding algorithms, of course). Thus, you enter the item into auction
> with a starting bid of (say) $25.00. You also specify that you'll accept bid
> increments equal to or greater than (say) $10.00 ONLY; incremental bids of
> less
> than ten dollars are not acceptable.
>
> First bidder comes along. She/he notices (and knows) only three things about
> the auction:
>
> i) the bidding starts at $25.00 (and no-one's bid yet);
> ii) minimum bid increment from any previous bid is $10.00; and
> iii) there is a (to her/him) UNKNOWN reserve price.
>
> She/he bids the minimum, $25.00.
>
> Along comes bidder number two. He/she says "Ha! I'm not gonna enter any
> wimpy
> little bid! I'm bidding my entire savings account!" #2 enters a bid of
> $175.00. Result? The bid only rises to $35.00 (remember the minimum
> increment
> was $10.00), and the second bidder is informed that (a) he/she is the high
> bidder for item "X", and (b) he/she still hsn't met the reserve price.
>
> Now go back. This time, let's say bidder number two actually entered a bid of
> $225.00 as the maximum he/she wishes to bid. Result? The bid rises to
> $200.00
> (the up-'til-now unknown reserve price), the second bidder is told that he/she
> has met the reserve and is presently the high bidder, and the bidding
> continues.
>
> Now along comes bidder number three. Number three notes that the incremental
> bid is a minimum of $10.00, and, not wishing to outdistance him/herself, bids
> $210.00. Result? The bid amount rises to $220.00 (remember that bidder
> number
> two, in our alternate scenario, entered a bid ceiling of $225.00, counting on
> the bidding algorithms of eBay to automatically bid on his/her behalf up to
> the
> maximum bid of $225.00), bidder number three is told that she/he has been
> outbid by another bidder, and the bidding continues.
>
> And so it goes. It's actually a fairly slick little system. If you, as the
> seller, never receive a bid which meets your reserve, it's up to you whether
> you sell the item at the "inadequate" price or not. If a bid does meet your
> reserve, the rules state that you *must* sell the item.
>
> Garth
>
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