I've never really been bothered by "sniping" in eBay. I always bid my absolute 100% maximum, and if someone bids more than me, then they can have it.
Like, if I'm at a store and an item costs $500, and I bring it to the checkout and the cashier says "oh sorry that was mislabeled, it's $500.01 not $500", there is no world in which I go "okay never mind then, $500 was my max". There does not exist a situation where I've decided I want something at price $X, but would not buy it at price $X + $0.01, because $0.01 is absolutely negligible.
So where does this fantasy of an absolute max price come from?
and so, absolute max price is not a fantasy - the world would be absurd if it were - but instead its a real and difficult to construct value
Imagine someone wanting to pay $3.50 on an auction and them rounding up to $4 to account for cent sniping. You're saying they should bid $4.01, but the bid is already including half a hundred one cent increments beyond the price to avoid cent sniping.
You're saying it's only one cent out of 50 cents. Then you're saying it's only one cent out of 51 cents so you should keep bidding more.
The infinite budget of one cent increments that you're dreaming of is actually finite and probably easier to quantify than the absolute price itself, so you're taking a problem where the hard part has been solved and are now obsessed with the easy part that almost nobody bothers paying attention to.
Edit:
Maybe the context isn't obvious but eBay has an automated bidding system with coarse grained increments for automatic bidding like 25 cents. This means there is a finite number of increments that can be meaningfully cent sniped before getting into the next coarse grain increment. You can't actually win an auction by placing a one cent higher bid at the last minute in an unfair way. Sniping on eBay isn't about winning the item, it's about doing a sealed bid auction where others can't see your price to nibble it up since the automated bidding systems performs a snipe for you at the last nanosecond if you entered a higher bid. There is no meaningful situation where a cent or two is standing between you and the item.
For tricky-to-price items like unique art pieces, the idea that you can pin this down might be a fantasy, but for commodity items it's pretty reasonable. If you can buy the same thing at costco dot com for $500, then it's probably not worth more than $500 to you, and if at auction you get outbid and it sells for $500.01 then you'll shrug and go order the same thing for a cent less, having wasted only a few minutes of your time. If the item you're bidding on is discontinued (e.g. it's last year's model) but you can buy a slightly better one for $550, and you can spare that extra $50, then again you won't be too sad about getting outbid. Online auctions are more popular for used items, but again in that case you usually still have an idea of what a used item is worth to you.
That said, the max price is supposed to be a price where you are not especially happy to get the item at that price, but not really sad either, a price where you would say "well, I hoped for better but I guess that's a fair deal". That's not realistically pinned down to the cent. But if you set a max price at $5000 and would be happy to get the item at $5000.02 (for some reason other than satisfaction from sniping), then you set your max price wrong, or at least differently from how economists expect you to set it.
I think this is the problem. When most sciences observe reality diverge from the model, they see that as a flaw in the model. When economists (at least you HN "economists") observe reality diverge from the model, they seem to see that as a flaw in reality.
The model is wrong.
"I made my max bid $500.01, but I'd have paid $500.02!"
"I made my max bid $500.02, but I'd have paid $500.03!"
…where does this process end?
My phrase "how economists expect you to set it" is probably wrong here, since I'm not an economist, I've just read the most basic theory about how to use this tool, and also used it myself (on eBay, you know, years ago when the site was mostly auctions). So I don't really know what "economists expect", but rather the basic guidelines for using this tool. You got me there.
> I think this is the problem. When most sciences observe reality diverge from the model, they see that as a flaw in the model. When economists (at least you HN "economists") observe reality diverge from the model, they seem to see that as a flaw in reality.
But like, to double-check here: "reality" means your imagined use of a tool that you do not in fact use, right? Like you say you "don't do auctions" and I'm trying to explain what that option is for, and you're countering that the basic "how to use this tool" explanation is a wrong model of reality?
If you're always willing to add one more cent then that wasn't your maximum.
At a shop, usually you're paying less than the maximum you'd be willing to pay, because the shop's prices are fixed and it would be a big coincidence if the price they set happened to match your max price exactly.[1] So even if we model you as homo economicus, it's normal that you're almost always fine with paying $X + $0.01.
In the case where $X really is your max price (i.e. it's right at your threshold of indifference), the idea of rejecting $X + $0.01 seems less silly. You were already very close to deciding $X was too much, so you're probably feeling ambivalent about making the purchase, and the trivial nudge of an extra cent being added to the price might as well be what pushes you over the edge.
[1] There are exceptions, e.g. when you have a negligible preference between brands A and B, so you're defaulting to brand A because the prices are exactly the same, but you would buy B if it were marginally cheaper. But that doesn't affect the main point here.
(And it has to be theoretically false, otherwise $X is equivalent to $X + $0.01 for all X, and so if you'd buy something at 1c you'd buy it for the contents of your bank account.)
If you still dispute this, you need to try to explain how a larger price difference can affect your decision. If you'd happily place a $1 bid, and you'd definitely not place a $100 bid, and a 1c difference could never deter you from placing a bid, then... well, how is that possible?
This process doesn't work endlessly. You can't just add $.01 a billion times and I'd still pay it. But it works once or twice.
Shops set prices like $499.99 due to funny psychological effects: $499.99 is still a price "in the 400s" while $500 is "in the 500s". Nobody sits down and thinks logically about it and concludes that no, the $.01 difference between $499.99 and $500.00 crosses the line. But people see $499.99 and the brain initially goes "oh, it's only 400-something".
- agreeing there must be some threshold such that if the price is $X then you will buy(/bid on) the item, but if the price is $X + $0.01 then you won't;
- but maintaining that in a case where you have already decided to buy/bid and the price then rises by $0.01, you will always go ahead and pay the extra cent (provided this hasn't already happened a bunch of times)?
If so, then I don't see the original problem. Do your best to estimate X (or, more specifically, the value of X you actually endorse as your 'true' valuation), and put that in as your maximum bid. If you get the item at $X you'll be marginally pleased; if you get it for less then you'll be more pleased; and if you miss out on it then you shouldn't mind, as you knew it was only going to be just barely worth it at $X.
If you're actually disagreeing with the first point, then you still need to explain how that can make sense. It's coherent to say that in practice, after making the decision to buy at a given price, you would always accept a 1c price rise but at some point between the first 1c rise and the billionth you'd tell the guy to piss off. But that's not the same as saying the actual value of the item, separate from the emotions involved in the purchase process, is somehow indeterminate. If it's not worth it at $1, and it's worth it at $100, but 1c can never take it from "worth it" to "not worth it", then ?
> - agreeing there must be some threshold such that if the price is $X then you will buy(/bid on) the item, but if the price is $X + $0.01 then you won't;
No, I'm not. If I will buy an item for price $X, I will buy the item for the price $X + $.01. The decision to purchase something is more complex and cannot be encapsulated as one single dollar value.
I think something your model fails to account for is: there is friction associated with a purchase. I will not necessarily go through the process of buying something whose "value" is $0.1 even if its price is $0.09, because there is friction to making a purchase which that $0.01 profit doesn't cover.
As an example: I recently played a Pokemon ROM hack where there was an NPC selling a nugget for 4999. You can sell the nugget for 5000. That's 1 coin profit; objectively a good trade, right? But going through the process of purchasing something isn't free. So in spite of what your economic models may suggest, I did not stop everything I was doing and spend the rest of the game buying nuggets for 4999 and selling them for 5000, because that would've been boring and my time has value.
If I've already gone through a lot of the process to decide to buy something at a certain price (which includes doing research to find out that the thing suits my needs, researching how the market looks for that category of thing, then bringing the item to the cashier or engaging in the eBay auction or contacting a seller), then I've already spent some not-insignificant amount of resources on the purchasing process. A $0.01 price increase will never be enough to stop me from completing that purchase, because $0.01 is not worth going through the whole process again.
If I'm already at the point where I want to bid on an item at $X, then I have spent more than $0.01 in effort researching things to bid on, so I would also bid $X + $0.01.
Yes, that's part of what I was trying to account for with my second bullet point. But before you've made that initial decision, there must be some price that would cause you to make it a 'yes' and some marginally higher price that would cause you to make it a 'no'.
This value obviously won't be totally constant across time -- it will vary with your mental state. But at any given time (and for any given roll of the mental dice, if we're assuming there's some true indeterminism here), it must exist. So when we're translating from "what's the maximum I would pay" to "what should I bid", we can imagine that we're in our most rational and clear-thinking frame of mind, aren't seized by any strange impulses, and so on.
The time and effort of researching a different item also has a value that could be pinned down in a similar way. So it doesn't fundamentally change the arguments here; if product A would be worth $X in a vacuum, but you'd happily pay $Y to avoid going through the research process again, then you should bid $X+Y.
Could there exist some hypothetical subjective value? I mean maybe. But not one that I have knowledge of, so it's not something that can even hypothetically affect my behavior. The only time at which I could possibly be aware of my own subjective value judgement of a product necessarily has to be after I have invested time to evaluate it.
(But also, how is the annoyance not irrational? Your estimates weren't cent-accurate, but they were just as likely to be slightly too high as slightly too low. And you haven't learned anything new about the true values -- unless you take your emotional reaction to be new evidence. For your emotional reaction to be new evidence, it has to be somewhat unpredictable, otherwise you could have fully factored it in in advance. But you seem to be saying that you're predictably going to be annoyed by a 1c loss.)
Knowing people bid snipe by bidding one cent over whole dollars, would you consistently bid two cents over if it meant you would win more of your auctions?
One cent is negligible. If you asked me if I would have paid $10.01 instead of $10.00, I'd probably say "Sure". $10.02? $10.03? Like, where does the line get drawn?
And then you come at it from the other way. Let's say I'd pay $10, but not $11. But what about $10.50? $10.25? Or we can go down by pennies again.
I agree, put in your limit and walk away. If you get overbid, even by a cent, don't sweat it. That's the game. But I can see why people get frustrated when they lose an auction by one cent.
This would let people stop thinking "I lost by one cent" in that situation. It also has a marketing benefit: look at all these people who got great bargains relative to what they would have paid. And it's not an unreasonable amount of transparency: in second price auctions e.g. for stamps or electricity, it's normal to publish the details of all the bids.
Of course eBay has already thought about this more deeply than me and perhaps trialled it and decided they didn't like it. Maybe it's off-putting to sellers to see they lost something for $10 to a buyer who would have paid $30?
If the current price is $5 and your max bid is $30 and I put a max bid of $100, it will make the current price $31 - $35, whatever the increment is.
To get ebay to accept a bid of one cent over, you have to explicitly set that. Let's say, I'd actually pay $30 as well. $30.01 isn't materially different. So if I put in $30.01, my bid becomes higher than yours.
In fact, I'm somewhat angry at sellers setting up auctions if there's no other way to acquire a specific item. Why they won't put a minimum price they're happy to part with some items for, instead of wasting time of a lot of people by withholding target price and pretending they're earning premium through work?
Also some sellers seem to use some fake accounts to bid high on their own item, revealing your max bid, then cancel their bid, then bid right under your max bid to maximise their sell price. Happened to me twice, and now no longer setting my max bid in advance since.
The 'nibblers' will invariably show up and bid small amounts until they exceed your maximum bid, while not revealing theirs.
A bidding war can make the perceived value of an item increase.
People's competitive behavior, or "you're not taking this from me," or "I've definitely got this item and have made plans" or any number of other emotional behaviors take over.
People's railing against sniping also demonstrates this.