To: T. Pascal who wrote (4172 ) 7/20/1999 2:57:00 PM From: Doughboy Read Replies (1) | Respond to
T. Pascal: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. Anyway, a buyer who sets their proxy bid above the current ask cannot be said to be "cheated" because that was a price at which they wanted to buy the item. If they didn't want the item at that price, they would not have set the bid where it was set. In a perfectly efficient market, there is no such thing as cheating. That being said, I guess the 68,000 dollar question is whether eBay is an efficient market or not. IMO, eBay is as close to a perfectly efficient market as we have today. I've noticed for example in the case of very popular items such as Palm Vs, you get virtually the same price at the end of each auction for the Palm V, and it is always just about the same as the price that you would obtain by buying from a discount web-site which sells near or at cost. In fact, I found that sometimes people are paying $350 for a Palm V, when they could have bought it from Cyberian Outpost for $340. That's a sign of an excellent market, price very close to cost, albeit with a little lack of information about other sources of Palm Vs. In sum, I think the particular strength of eBay is that that it drives price so close to cost that it eliminates the opportunity for cheating.
