Automatic bidding?

[premil8480]

Why am I constantly getting outbid by automatic bidders? Many of the items I've bid on already have a slew of auto bidders and I can't seem to outdo them, even when the price goes several hundred dollars up. Is there a way to get around these, and why is automatic bidding so common now?

I'm not sure if it's just me, but I think automatic bidding kind of defeats the purpose of bidding-you're not really  there. 

[soh.maryl]

First of all, I am sure you know that online auctions don't work like regular live auctions.  Bidders do not have to "be there" to bid.

Second, many smart and successful buyers evaluate an item they want and then place a bid.  No one sees the amount of their actual bid.  Let's say I have an item listed for $56.  You believe it's worth maybe $100, so you bid that amount.  The showing amount will be $56 until other bidders come along, at which time the showing bid will rise one increment at a time.  You have no way of knowing how much those other bidders have bid, maybe it's thousands.  

There is nothing wrong with this.  You, too, can do it.  Decide how much you want to pay, then bid that amount as close to the end of the auction as you feel comfortable with.  Nibble bidding, which you're apparently doing, is often unsuccessful.  

No, there isn't any way to get around this and there shouldn't be.  It seems like many of us have busy lives.  Very few people want to sit around and watch the numbers climb as the auction nears the end.

Auctions end at a specified time.  Everyone has the same length of time to place a bid.  

[kathiec]

@premil8480 

I don't think you really understand how bidding on eBay works. Perhaps reading this will help you:

www.ebay.com/help/buying/bidding/bidding?id=4003

[eburtonlab]

If you are immediately outbid after placing your bid, it is because your bid was less than what the previous high bidder bid.

Keep in mind that eBay only displays enough of the high bidder's amount to beat the previous high bidder by up to one bid increment.

At any given time, the current bid amount shown is the amount the high bidder will win at and pay if there are no further bids, regardless of how high the high bidder actually bid, unless there is a reserve amount.

This means that any bidder can bid the maximum amount the bidder is willing to spend, and the winner will only pay up to one increment above the second highest bidder's amount.

[yuzuha]

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@premil8480 wrote:

Why am I constantly getting outbid by automatic bidders?

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Because you are not bidding enough. If you're constantly getting outbid, that means these other people want the item more than you do and are willing to pay more for it.

[reallynicestamps]

Automatic bidding is used by those who cannot really be there.

DH used to bid on eBay Australia, with a 12 hour time difference.

Most auctions ended at 3am EST and he preferred to be in bed then.

So he moved to a sniping service which laid bids for him.

Previously he had used the bid once /bid your maximum but he found nibble bidders were outbidding his maximum bids.

If you are constantly being outbid, the problem may be in the mirror.

Either you don't know the market as well as you think, or you can't afford the things you want to buy.

The winning bid is the highest bid, not the last bid.

[mudshark61369 · Accepted solution]

@premil8480,

"Many of the items I've bid on already have a slew of auto bidders and I can't seem to outdo them, even when the price goes several hundred dollars up. Is there a way to get around these, and why is automatic bidding so common now?"

Because you are not really experienced using ebay, you may be misreading the bid history pages.  The clue to figuring out who is an automatic bidder vs. those who bid one increment at a time over and over (nibble bidders) is to look at the time stamps of the bids. The time stamp for an automatic bid will be the same, unless their maximum bid amount was reached and they bid again. 

  You may find that some who nibble, actually do by placing automatic bids but only for a few increments at a time. 

  The thing is that you biding early against automatic bids, is actually driving up the price, which is why most experienced bidders prefer to place bids as late in the auction as they can or are willing to which is called Sniping.  By doing that they do not give others who nibble bid, a chance to bid up the item and not much time at all to react to their bid.  However, for a highly collectible item you may get several snipers who will run the price way up. Then it boils down to the person who is willing to bid the most for the item winning, but that bid could be an earlier automatic bid.

"I'm not sure if it's just me, but I think automatic bidding kind of defeats the purpose of bidding-you're not really  there". 

Anyone who places a bid within the time allowed IS REALLY There.  Often snipers have been watching the bidding for several days.

  If you think of bidding on ebay as being a sealed bid auction, like you see at a charity events, where you write out your bid amount,  place the bid in a box. Just because a person who arrives late places a bid doesn't exclude them from bidding.  Then there are those who even at live auctions wait until the bidding slows down who will jump in and bid, like some do on Storage Wars.

The one practice you want to avoid, is placing a bid for much more than you are willing to pay for an item called, Nuclear Bidding.  If another bidder does the same thing, one of you will end up winning and being faced with either paying what they won the auction for, or not paying and getting an Unpaid item strike on their account. 

[4pawsup*]

If you raise your maximum bid at the end of the auction and your losing all you need to do is go over your max. Your taking a chance that you may over pay but keep in mind the other guy will be only a couple dollars behind you. Now if you both bid hi well thats the sellers dresm. But if you want to beat them raise your max dollar amount.

[woodland_gnome]

eBay does not use an English Outcry auction format (bid and counterbid, going going gone to the last bidder at the full amount of the last bid) and you put yourself at a big disadvantage if you try to bid like it was such a format. eBay's auctions use a fixed-time semi-sealed-bid modified second-price (Vickery) format. This makes them fair to all potential bidders no matter their timezone or schedule. What you need to know to understand how eBay (this does not include "Live Auctions" on the eBay site which have different rules) auctions work:

The highest bidder (as of the end of the auction) wins, regardless of when his bid is placed (even if it was received in the last second and didn't show on your screen when your countdown got to 0), but the price is set by the SECOND highest bidder (generally that underbidder's highest bid plus 1 bid increment; less if the winner's bid is not a full increment higher than the underbid, including an earlier tie; more if needed to meet the reserve in a reserve listing; the starting bid amount set by the seller if there is only 1 bidder and no reserve).

During the auction eBay calculates and posts a "current bid", which is simply what the price will be if there is no further bid activity before the auction ends, and uses that "current bid" to set a minimum amount for new bids (1 increment over the "current bid" except for the very first bid, which need only be at least the "starting bid" amount set by the seller).

During and after the auction, eBay hides the full amount of the leader's/winner's bid to the extent that it exceeds that calculated price. (If the winner/leader has made multiple bids, only those that exceed the price have their full amount hidden.) For any such hidden bid amount, eBay substitutes the calculated price amount for the full amount of the bid.

When you bid less than what the current leader has bid before you (or the same amount--ties go to the earlier bid), you are immediately outbid and become the new underbidder and the "current bid" is recalculated at 1 increment higher than your bid (or the full amount of the previously hidden maximum if less than an increment over your new bid, including an earlier-placed tie). When you bid more than what current leader has bid before you, you take the lead at 1 bid increment over his/her (previously hidden) maximum (or the full amount of your bid if it is less than a full increment over his previously hidden maximum; but if it was "Reserve not met" before you bid and your bid was at least as high as the previously unmet reserve price you take the lead at the exact amount of the reserve price unless the general rule would dictate a higher price because the previously hidden maximum was less than an increment below the reserve).

Some people, including eBay, try to simplify this by drawing an analogy to an outcry auction, but one where eBay "automatically places bids on your behalf" up to your maximum bid (hence the phrase "automatic bidding"). This is an imperfect analogy, and in many cases people trying to apply it to a particular situation end up either oversimplifying or overcomplicating the process leading to many misconceptions. If you want to understand how the eBay bidding process happens you need to get away from that analogy. (It is not necessary to understand it if you know and use the following winning strategy below and are willing to accept the results as accurate even though you don't understand how they were arrived at.)

The only winning strategy on an eBay auction is to bid your real honest wouldn't-bid-an-increment-more TRUE maximum that you would pay for this particular item WITHOUT REGARD to what anyone else appears or doesn't appear to have bid. Since what anyone else has or will have bid by the time the auction ends is already figured into the price if you win, there is no need to try to figure it into your bid (other than to assume that someone else is likely to bid about the same amount as you, so it is a good tactic to bid a bit over the round number you likely have in mind as your true maximum to increase your odds of being on the winning side of what might have been a tie or a loss to someone who knows this tactic); all you need to figure is at what price point you would rather someone else get the item than you having to pay more. When you bid, early or late, or whether you put in a lesser bid(s) before your true maximum, those are tactical matters that may or may not influence the behavior of others (other bidders, potential bidders, and the seller) to your advantage or disadvantage.

[ge-298791]

Very helpful explanation.

However, since eBay takes a percentage of final sale price for every item sold, how does anyone know whether their algorithm doesn’t just “claim” that the winning bid was the maximum bid on every auction?  eBay must have data on winning bid/maximum bid ratios.  If the majority of auctions with completed sales have ratios near 1, then there may be something wrong with their algorithm.

[eburtonlab]

how does anyone know whether their algorithm doesn’t just “claim” that the winning bid was the maximum bid on every auction?

If you win a few auctions, you can see that not all of the auctions you win end at your maximum amount.

The bid history page shows the bids received by eBay, so users can see what bids have been placed, and when. Any user can check to see if the second highest bidder's bid amount is less than an increment from the winner's bid.

The winner knows the maximum amount the winner's bid, and therefore knows whether the second highest bidder's amount was exactly one increment below that amount, even if other bidders cannot know that.

Many auctions end with only one bid, indicating that unless the bidder bid the minimum starting bid amount, the winner did not pay the maximum bid amount.

[woodland_gnome]

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@ge-298791 wrote:

Very helpful explanation.

However, since eBay takes a percentage of final sale price for every item sold, how does anyone know whether their algorithm doesn’t just “claim” that the winning bid was the maximum bid on every auction?  eBay must have data on winning bid/maximum bid ratios.  If the majority of auctions with completed sales have ratios near 1, then there may be something wrong with their algorithm.

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You can just look at the bid history to see that the highest bid of the second highest bidder  is equal to or less than 1 bid increment under the final price (unless the auction was Reserve Not Met at the time you went to place that bid, in  which case the price is exactly the Reserve Price that the seller set).

[soh.maryl]

You can go to the Bid History of any sale and see exactly what transpired.

What would be eBay's goal in lying to you about the winning bid in an auction? 

[mudshark61369]

@ge-298791,

" how does anyone know whether their algorithm doesn’t just “claim” that the winning bid was the maximum bid on every auction?"

We know because all who have replied have won auctions for less than our maximum bid price.  If ebay auctions always ended with people's maximum bids being reached, do you really think that after 28 years, people would still place automatic bids on them?

[ge-298791]

Pardon my ignorance up front as I am still new to bidding in auctions on e-bay.

1)  All auction houses make money from a percentage of the final sales price by acting as a facilitator.  As such, they always have an incentive to push the final sales price to as high as possible.  This is similar to a "buyer's agent" in real estate, who is supposed to work for the buyer, but is really incentivized to get the buyer to make as high an offer as possible to maximize their sales commission and close the sale.

In the system as described by woodland_gnome in which the auction house knows what the maximum price any bidder is willing to pay, this seems to be even more fraught for abuse.  Clearly if an auction house wanted to do so, it would be too obvious to do so on every auction and at a 100% ratio of the winning bid:maximum bid each time.  One would have to look at the data in aggregate, rather than just anecdotally, to determine whether there are sham bids or faulty algorithms pushing up winning bids to higher than they would have been.  Just trying to understand what checks and balances are there. 

2) Can someone kindly explain this recent bidding history?

Why is the starting bid by 7***3 of $25.99 time stamped on 11/28/23, 8:19:34 am PST, but the subsequent higher bid by z***4 of $29.50 time stamped earlier on 11/28/23, 6:30:33 am PST?  If z***4 was doing automatic bidding as the italics suggest, then why was their bid, which was time stamped earlier, not the initial starting bid?