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Message:: [QUOTE="-jeffB, post: 1445467, member: 27832"]Scenario 1 (bid early, bid your max): "I've got a pretty good idea what this lot is worth, but there are a few things I'm uncertain about. I'll bid $X." Some time later: "Wow, three other people outbid me already. Maybe I underestimated the value of a couple of those pieces -- yeah, now that I look more closely, I'll bet that's exactly what happened. I'd better raise my bid." Some time later: "Well, here's that lot I won. Hmm -- I was afraid of that; these two pieces look like they were cleaned. But they're still pretty nice. I guess $X + 100 wasn't that bad a price." Scenario 2 (sniping): "I've got a pretty good idea what this lot is worth, but there are a few things I'm uncertain about. I'll snipe it at $X." Some time later: "Well, a couple of other folks sniped too, and it went for $X + 10; guess I'll whine a bit in the forums, and then move on to the next auction." or: "Hah! The next highest snipe was $X - 50, so I got it for $X - 40. What a rip!" With completely rational bidders, and perfect knowledge of the lot, it doesn't matter whether you bid your max upfront, snipe, or run an auction with extensions. But bidders aren't completely rational, and you never have perfect knowledge of the lot. As such, seeing higher bids can exert psychological pressure, and it can provide additional information about the lot. (Example: "This seller has ten lots of Liberty nickels listed. Why is this one bid up to $250, when all the others are around $100? Oh -- now I see that "85" peeking out on one of the partly-covered coins. I missed that the first time.") Under those constraints, sniping tends to minimize the closing price, which is good for buyers, bad for sellers. Extending auctions for late bids would tend to maximize the closing price; that's good for sellers (and the auction house), bad for buyers, except that it could reduce overall revenues if buyers get disgusted and go elsewhere.[/QUOTE]

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