Penny Auctions: They're Gambling
codinghorror.com
codinghorror.com
http://www.swoopo.com/ and http://www.swoopo.co.uk/
You probably won't see the same items I do, but I'm sure you'll note two ridiculous (dishonest?) things:
1) You'll see the same item listed for the same number of US Dollars as Pounds Sterling (e.g. I see an iPhone for $86.50 and £86.50, with the same "countdown" running). This is not outright deceptive for penny auctions because, after all, the current "bid" is just a score, not an actual value that anyone ever pays.
2) You'll see that people in the US and UK are bidding against each other on the same auction, but people in the US and UK think they're bidding on different items. For example, I see on the US site a Sony VAIO VGN-AW220J/B 18.4-Inch Laptop for $10.27 with 2:45 remaining, and on the UK site a Acer Aspire 8930G 18.4" Notebook for £10.27 with 2:45 remaining. If you click through to both auctions, you'll see the same people and bids on both - they're clearly the same auction. Presumably when someone finally bids, Swoopo buys whatever item they think they won and ships it to them.
[1] In comment below: "populace has NO IMMUNITY . . .it will run through them like swine flu". Come on. Has the populace moved to Nevada and dashed themselves upon the rocks of Vegas? Are we a nation of lottery addicts and OTB junkies? I bet if this were about drugs and/or prostitution, few here would be saying "the populace has NO IMMUNITY to instantly available pleasure and distraction! It will run through them like swine flu!"
PS: As long as you recognize gamboling is about having a sadistic sort of fun and spend a tiny % of your income, you can get a lot of entertainment for your dollar.
Totally unrelated but I have one of those and it's a wonderful laptop if your back can handle carrying it.
Stay far away from Swoopo.
Each of these were ways to game the existing regulatory system. Take dollars, contort them in a way that appears new, and loudly declare you aren't subject to any existing regulations. The regulators won't catch up for several years, and by then you've taken whole generations of investors to the cleaners.
Swoopo isn't an auction, it's a raffle. When your school sells 500 $1 raffle tickets for a $100 prize, the raffle buyers understand that the school is going to profit $400 and the kids are going to get to go to band camp, and the government which regulates games of chance has given it a pass (typically, raffles may have to apply for a permit from a government agency, and only bonafide religious, charitable, or education groups are allowed to do it without the heavy regulations applied to casinos and the like).
Swoopo just decided to call themselves a legal auction rather than an illegal raffle, and they're waiting until the regulators catch up with them. Then they'll slightly alter how the scam works, loudly declare this new system is perfectly legal and isn't subject to any existing regulation, and start all over again.
This type of internet-scamming is going to be increasingly common, and programmers really need an ethical duty not to participate. It's like a 3-card monte, or free throw shooting game where the basket is oblong rather than round, but, hey, over the internet.... call it Carnival Scams 2.0. The populace has NO IMMUNITY against this sort of thing so it's going to go through them like swine flu.
It's not clear to me that it's unethical to build a tool that someone could use to harm themselves.
Further, you've just described how this will go on anyway ("censorship as damage" and all that).
Because of this indefinite extension, and because the way most people play this auction game is by spending up to a certain percentage of the value of the item (<= 100%), it's definitely a gambling game. You're gambling that some other new bidder will not happen upon the auction before your bidding allowance runs out. If they do, you're screwed. If they don't, you can win.
That's the most important reason Swoopo funnels as many bidders as possible to as few auctions as possible - it drags out the auctions, allowing them to collect as many bids (dollars) as possible for the fewest prizes delivered.
I do hope that people who get taken realize what a horrible deal it is after the first try. Sadly most will keep trying again and again.
As a device of gambling/entertainment these "auctions" would be fine if the returns would be somewhat regulated, that is house take would never be above 200% (even 120% would probably be fine).
Even though people can try to use bidding strategies, it is not a game of chance.
Keep this terrible blog far, far away, please.
Even in the case where you are willing to put a lot of money into a "full price" auction, the ability that someone else has to put one dollar + auction price in and defeat your 2 * auction price dollars in bidding + auction price makes it unlikely you will win without "investing" radically more than the value of the product. (Especially since they are trying to create a bidding war between 2 or more people each of which are unaware of the "sunk cost fallacy", or at least not able to act on it.)
I'm not sure what metric you would prefer, but if you feel it's dumb and not gambling, I would invite you to try it. Me? I'll be over here, not trying it. I can work the math. But feel free to let us know how it goes.
If you'd like an easier metric, just go to the site and find a currently active item. Simulate yourself hitting the "bid" button, and keep track of how often you do it, and whether you win the item. Until you sit there and watch the counter in real time (as I did on a couple of items), you can't feel how this site works.
(And since Swoopo may end up here, I'll repeat what I said on my blog: I am completely uninterested in hearing from you, Swoopo.)
[edit: what is the point of participating in an auction for commodity goods other than to pay less than retail? I assume that people who take part in this site do it in the hope of coming out ahead, not to win an auction at any cost even if it means paying more than the item is worth. I don't see how users of this site can confuse "winning an auction" with winning in economic terms]
You don't get to redefine words to support your personal opinion, and still have a valid argument.
[edit: what makes a game of chance is the point that you win or lose money, not whether you win or lose the auction. I'm not confused, I'm just not getting distracted by the semantics of "winning the auction" vs. the real objective you are after]
Do I lose if I purchase it in bulk from costco instead of pooling the resources of my friends, starting a company, and buying directly from a distributor?
Is the soda machine a "game of chance"?
The answer to all of these questions is "no". None of them are games of chance.
This would be a game of chance if it was "pay $10 and you might win, but we won't tell you until the end" instead of "pay $10 and if somebody pays $11 we will tell you so that, if you chose to, you can bay $12. This cycle will continue until the item reaches a point that nobody is willing to spend more for the item"
This is not a game of chance because you get to CHOSE if you are going to win, and they TELL you if you will before the conclusion of the auction (or game, in your description).
You ARE simply confused about this, because it isn't possible for a rationally thinking person to make the argument that you are and mean it.
In a real case, if there are two or more people as determined as you, it is impossible to predict who will get the item. All will be spending money in advance without knowing who of them will get it. That's why it's a gamble.
As in...if you bid $10, then $12, then $14, are you actually spending $36 + bidding fees?
Because if you're only paying for the item once you win it, that is NOT a gamble.
Yes, there are fees involved. This is customary for EVERY auction. (I don't know about ebay, but visit a real-world auction sometime).
It is an english language problem...If you spend $90 on a $50 item, you lose because you are losing money.
We are talking about lose in the "win/lose" usage of the word.
You're not wrong, you're just confused.
The fact that one will usually lose money with that site does not change the fact that the winner is the person willing to spend the most money.
"I would point out that they sometimes run 'special' auctions where the 'auction' price is free, and all you pay is the bid price. In that case there is 0 ability to 'win'; it's straight-up gambling."
If there is no cost of entry then it isn't a gamble, because a gamble requires you to risk money. Quit inventing definitions to support your defeated argument.
"I'm not sure what metric you would prefer, but if you feel it's dumb and not gambling, I would invite you to try it. Me? I'll be over here, not trying it. I can work the math. But feel free to let us know how it goes."
That is a red herring. Correctly pointing out the fact that it is not a gamble, does not mean that I think it is a wise use of my money. Do not use such intellectually dishonest tactics to try to change the subject from your failed argument to one that I did not address.
You are conflating the inability to control the price with the inability to control the outcome.
You define the outcome as winning the auction. That's dishonest. The outcome is whether you'll spend more or less than buying the item outright at retail price, which is what you are competing against.
Are you a politician or something? That is an incredibly dishonest phrase to use and you should be downvoted for that alone. (Though I note with some pleasure it hasn't seemed to have worked.)
I'm pretty comfortable with this definition of gambling. You are not in control. Part of the scam is that you think you are. But you are not. Your comprehension is being successfully hacked.
Try it. Since you apparently won't understand until you do, try it. Then get back to me. See just how much control you have.
No. He said that they only charge you for the bids, and not for the item, in these special auctions. So if you bid twice and win, you pay only 2 x $0.15, whereas normally you would pay 2 x $0.15 + whatever your highest bid was (I hadn't heard about these special auctions before, it seems like people would just keep bidding forever.)