Archive for March 13th, 2014

March 13, 2014

Small Misfortunes & eBay

It feels like we’re running into a string of bad luck lately.

cracked

Last Saturday we took Nicki to the duck pound to get her out of the house. When we returned we discovered one of our refrigerator magnets had bit the dust. It was as though it had just lost structural integrity. The piece still attached to the magnet back end was still on the refrigerator. The base piece had slide down the refrigerator and was resting on another magnet a few inches below. The broken Caryatids were on the floor.

I was really bummed. The magnet was a souvenir from our honeymoon in Greece, and my favorite one at that. We visited Greece at the end of tourist season, when most of the souvenir stands were somewhat picked through. I broke our original Caryatid magnet on the last day of our trip. I remember wondering Monastiraki Square our final night looking for a decent replacement.

Alas, Monastiraki Square is pretty far away these days.

We did find a replacement on eBay, but it’s the colored version which I don’t like as much and five times as expensive. At least we found a similar one?

We also didn’t win that baby’s first Christmas ornament. Shortly after we placed our bid there was another person who bid over us, and then removed their bid. We figured they were testing to get a feel for our bid price. Sure enough, we were outbid again a few hours later. I told Domingo not let it go. At the time I figured we didn’t really need a spare, and another cheap one would come along at some point. I can’t imagine demand for “Baby’s First Christmas 2012” ornaments increasing over time. After the breakage of our Greece magnet (and the end of the auction) I had a change of heart. Rather than spend $6, we spent $13.

Here’s the dilemma: I’ve been using eBay a fair amount in recent years, especially for out of print replacements, but I don’t feel like I have a good handle on how to effectively shop on eBay. Does the magnet I want exist on eBay without color? Is there another cheap rocking horse ornament? How do I avoid other people bidding up the item I want?

Auction psychology is an area I know little about.

eBay uses a proxy bidding system, which is a second price auction. It’s provably mathematically optimal to bid exactly the maximum price you’re willing to pay. In other words, if everyone customer bids exactly once, and exactly the maximum price we’re willing to pay, then whoever wins the item actually pays the minimal amount needed to secure it.

Truthfull bidding may be provably optimal in theory, but there’s often a difference between theory and practice. Consumers are often not objective. I remember thinking to myself $25 was the maximum I was willing to spend on any ornament for our tree. When I was outbid for the 2009’s Season’s Treatings, I kept inching my bid upwards. After all, $27 isn’t that much more than $25. The final price tag? Just over $40.

I need to learn a little auction psychology and to be more objective.