Snipe S/W?

From: Mike Ford <mikeford_at_socal.rr.com>
Date: Thu Dec 21 01:43:13 2000

>A second-bidder auction without sealed bids is not a Vickrey auction.
>You can't snipe a Vickrey auction.
>>
>> I have no idea if eBay selected Vickrey's model, or duplicated it by
>> accident, but AFAICT the only difference between theirs and his is that
>> with eBay, the winner pays one bid increment above the runner up's bid,
>> instead of exactly the lower bid.

The problem I see with the Vickrey auction is that it better have a
"strong" penalty for default, otherwise you could just bid HIGH knowing you
would only pay the last "sensible" bid amount unless some other nut was out
there bidding high too. With 1 nut, he wins all the auctions at a fair
price, with 2 nuts, most likely one or both will default.

Case in Point, Dutch auction on ebay of 5 power supplies, and to sweeten
the deal the seller is offering a an item worth as much just about as a
power supply as a bonus to the high bidder. Most bids were around $10, then
a $20 bid shows up, then a $25, then a $35 sniped in at the last minute.
Everybody paid less than about $12 (lowest winning bid), but I was QUITE
tempted to drop in my own last minute bid of $37 just to raise the minimum
bid a notch or two. (yes I wanted both the power supply and bonus item, and
happen to know the seller who is a nice guy deserving of the overall higher
price.) My point is that the high bidders only made the bids they did with
the expectation of n-1 nuts, so they didn't have to make good on the full
bid amount.
Received on Thu Dec 21 2000 - 01:43:13 GMT