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[idea] Community Auction Site - Transience Divine
November 20th, 2007
02:02 pm

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[idea] Community Auction Site
I have a idea for a new kind of auction site. I want to use it, but I don't have time to make it right now... but I think it could make decent money, if someone else wants to make it.

A central idea is to have auction bids be paid both to the original seller and to the other buyers who lost the auction. The seller sets a flat price for each item they're selling. If multiple bidders raise that price, the extra is distributed amongst the other bidders as follows:

The winning bidder pays the bid of the second-highest bidder. After the original price goes to the seller, the remaining is paid by paypal to the other bidders, with the second-highest bidder gets the amount they bid above the third-highest bidder, and so on, all the way down. If the lowest bidder originally bid more than the original price, they get that difference.

This way, losing bidders can price how much trying and failing to get the item in question cost them. The winner bidder is paying the other bidders to not have the item, just as they're paying the original seller. There is no concept of "market price" involved here.

The site could take a flat percentage of the winning bid, but it would have to be tiny. The seller can also set a percent of winning bid to take away (also not too large), sweetening the deal a bit for them.

The other central idea is organizing the site as a garage sale, rather than an auction, in that people can post items and expect to leave them up for a long time. When someone bids on an item, a countdown starts, and items with active bids are featured on the site. Combined, these ideas make it possible to have an auction site that serves a much smaller population than eBay: items could be published only within a group of friends, or just the people who live close enough that shipping isn't necessary.

Current Music: Ah, but she can't take you anyway / You don't already know how to go.

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From:catullus_5
Date:November 21st, 2007 12:13 am (UTC)
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1. The obvious one: Does the seller have any incentive, besides altruism, to use this system instead of a traditonal auction where he instead of all the other bidders could get this system?

2. Suppose I'm an unscrupulous buyer. An item is listed with an original price is $50. I create many new accounts and wait for someone to bid. Suppose sucker A bids $60. Then I jump in and bid $60.01 with new account B. Then sucker C bids $70. I jump in for $70.01 with new account D. If the auction ends now, I only lose $60.02, not $70.01, because I'm B and so the $9.99 price difference between bids C and B belongs to me. If I pay attention closely enough, this tactic only costs me $0.01 for every time a sucker raises the bid. I guess as the site administrator you'd have to be very vigilant for this kind of stuff and make it hard to create multiple accounts.

(This is the way I think about systems - I always try to find the edge. It's the security engineer in me, or maybe the blackjack player.)
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From:jrising
Date:November 21st, 2007 02:00 am (UTC)
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1. Yup, two incentives, in addition to altruism. First, it's likely that the total bids will be inflated, and the seller can get a cut of that (though I'd probably limit what percent, since the idea works best at 0%). It's like the party game where you auction off $1.00, with bidding starting at $.01, but where you say that both the winner and the second-highest bidder have to pay you: people will keep bidding it up (for my site, because they have something to gain if they lose). Second, because a smaller group can support a reasonable auction, and you might want to sell something just to your friends.

2. Nope, you only get the amount you bid over other bidders (this being the real measure of how much more you want the item). In your example, you lose $69.99 total, when you pay C's $70 bid: $10 to A and $9.99 to C (and $50 to the seller). Creating multiple accounts has the same effect as re-bidding.
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