The Parentonomics 1st Copy auction is over and I am very pleased with the result; the winning bid was very flattering A$1,001.55. I’ll post more over at Game Theorist when I have spoken to the winner. For now I thought I’d graph what I learned about demand. Turns out that so long as there are at least 33 buyers of the book at its retail price, it will do better at that price than at $1,000. Of course, that high price was most likely a result of the ‘charity’ aspect of this auction. Who knows? It could be an asset.

But I did learn something about all of that. First, eBay is not the place for such things. For starters, there is no opportunity for jump bidding as eBay automates the bids. So there may have been someone who wanted to denate $2,000 but unless there were two, they would be better off doing outside of the auction. Second, because eBay requires PayPal as an option in Australia, once it is there it is used. So that cost me an extra $20. Not that I am complaining about all of that. I am just saying that perhaps the sellers griping about eBay Australia’s tactics have a point.

This weekend I bought a house. Not for me, mind you but for some family members. Basically, I became a buyer’s agent. Continue reading “Doing others’ bidding”

Today’s Age carries a piece on under-quoting in real estate markets. It does the usual thing of showing some examples of houses that were quoted between $365K and $395K but sold for $448K; 12.5% more. (The supposedly worst example was a house quoted at $680K and selling for $908K.) Now this type of concern raises lots of questions. The first is what is a reasonable tolerance on quoting? After all, we just don’t know how often the quotes are over-statements and what the variance is likely to be. We have all been at house auctions where two bidders have killed each other for a house meaning that it sells at a value 10 or more percent higher than expectations.

The second issue is: so what? If you go to an auction because you think you are going to be able to afford a house and then cannot, what is the big deal? You have bid what you have bid and if the house sells for lots more it meant that there were at least two others who were willing to pay more. Your presence may have given them comfort that some people placed a lower value on the house but it is not a given that this benefits the sellers in some unscrupulous fashion. The best they get is a larger crowd but, in the end, the eventual buyer also knows that that crowd might have been there because of under-quoting. Continue reading “Quoting and auctions”

Netflix is offering $1m for anyone who devises a more accurate way of using consumer reviews to judge movies (click here). Sounds like a job for a prediction market. After all, if the US DoD can use them to predict terrorist attacks surely whether a DVD will be popular would be nice and easy?

A news report today (click here) about a court case involving the sale of a Wirraway WWII aircraft on eBay. The aircraft actually looks like more of a WWI airplane but then again the Australian Air Force was a little behind. The basic story is: seller puts aircraft for sale on eBay, seller receives offer of $250,000 from buyer outside of eBay, bidder on eBay bids in last 20 seconds of auction at the reserve of $150,000, bidder sues seller for breach of contract.

These big ticket items on eBay always seem like a problem as eBay is a contract writer rather than a contract enforcer. They generate the terms of trade and bring parties together. But big ticket items (like houses and cars) carry their own sale terms and so it is all more messy.

Auctions work well when there is heavy commitment to the rules; namely, that bidders bid and sellers sell to the highest bid. As soon as that adherence does not occur, the auction becomes less efficient. That seems to be happening here. Moreover, my sympathy lies with the bidder because, after all, it was the seller who chose to list the item on eBay (as opposed to some other means) and the seller could have withdrawn it at any time. The auction actually closed and so that seems to me like a contract was agreed upon.

My experience with these matters is that news reports can be a poor guide as to what is really going on. So who knows what the heart of the matter truly is.

A new paper by Dan Elfenbein and Brian McManus looks at charity auctions on eBay to see whether giving part of the auction proceeds to charity raises bid prices. Here is the abstract: Continue reading “Paying more for charitable goods”