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

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[idea] Community Auction Site

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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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