>>In fact, economics would generally hold that in a perfectly efficient market, the confederate bidding up an item will always win the auction. I'll concede that in an inefficient market, i.e., where there is an insufficient number of bidders, a confederate bidding up an item can add some value, but I think you would have a hard time proving that the confederate would know when to stop making competing bids and that the number of successes in this method would outweigh the inevitable number of failures and the attendant transaction costs. <<
I address transaction costs and my way around that in my other post. Suffice it to say what you refer to as the "Confederate" is actually you. And as for efficient markets vs. inefficient markets, I say that when the bid prices and proxies are hidden, there is inefficiency (which is the case on ebay).
And yes, in the sense that you're not "cheating" because the person is willing to pay the price doesn't matter. In a real auction, the auctioneer is there to move the price up to increase his fee. Fair is fair. But when the auctioneer is manipulating the price, actively manipulating the price, I say that it's a "cheat".
As for economists and their theories, they're notoriously wrong. It may work in textbooks but the real world just ain't so. Economics is no science and as such, is based on subjective experience. Your anecdote about Palm Vs is enlightening, but mine are even better: I regularly bid on items on ebay and all I ever do is raise the price. Not on purpose, at first. I actually wanted to buy the crap. But I always got outbid by someone's blind proxy or else the l'user came back and outbid me. I've bid on items in the last hour, have beaten the proxy, and the fool still comes back and beats my proxy. If I hadn't participated in that way, the market would have borne the price, but it would have been too low. If I were actually in cahoots with the seller, or if the seller were me I would have left money on the table if I hadn't done the bidding.
Simple economics demand that sellers perform this algorithm. A little finesse and you get the feel of the bidders and what their proxies are. It's easy and fun and can even make you money.
Also, I could give a crap about the stock or the company. I'm just telling people who use ebay how to get more out of the fools who bid for their items. |
