Researchers at the University of Southampton have come up with what they call a solution to shill bidding on online auction sites. Currently, the lower an item’s start price, the lower the fees to list it. This, they say, encourages sellers to save money on listing fees and then shill bid to raise the price to an acceptable level.
They propose a restructuring of fees, so that the auction site would take a percentage of the difference between the opening bid price and the final sale price. This, claim the researchers, would put an end to fee-avoiding low starts, and incentivise realistic opening prices. With their minimum price guaranteed, no one would need to shill bid to ensure they got their minimum price for their item.
I think this research has got the nature of much shill bidding wrong. The high profile bidancient case might have been about using shilling to achieve an acceptable minimum price, but in general, shilling is much more likely to stem from emotional greed and opportunism: a seller seeing that a bid can be pushed higher. It’s about achieving more profit, rather than achieving an acceptable price in the first place. (Or so I guess: feel free to comment…!)
The researchers claim to be “at the forefront of auction mechanism research”, but one is left wondering if those making these naive proposals have actually ever used the site. What many people love about eBay – not least those in San José who want a return to “core” auction business on the site – is the low start, the thrill of a bargain, the excitement for sellers seeing their prices rise. Under the researchers’ proposals, every auction would be a Buy It Now: start price Â£9.99, BIN Â£10… what’s the point of the auction format any more? Where has the excitement gone? eBay becomes just another flat-fee marketplace.
This idea would hurt buyers: no more auction bargains. It would hurt sellers: higher start prices make for lower sell-through rates, less enthusiastic buyers and slower turnover. It would hurt eBay too, killing off one of their unique selling points. Remember, your taxes are funding this kind of spurious research. 🙄