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OT: Bidding Mentality

I have a question about car auctions, and bidder mentality in general. Lately, I admit, I've grown a teency bit addicted to a particular muscle car auction on the HD Theater channel. Hint:

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My question is: What is the point of lifting the reserve? I understand it from the Seller's perspective - it guarantees a minimum bid before they must sell.

What I don't get is why lifting the reserve has any bearing on enticing prospective purchasers to keep bidding. To me, you bid a price you are willing to pay. Period.

Am I missing something obvious here??

-mpm

Reply to
mpm
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Auctions rely on people wanting 'that' item, and losing their sense of reality to get it. Rather than bid their price, knowing that another similar item will turn up again, might go lower price as less want it.

Human nature? Excitement of the chase?

Grant.

Reply to
Grant

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Two possibilities: changes in the auction might trigger notifications to the bidders, bringing more attention to the goods. And, if the owner wants to sell the car to a buddy at a 'fair' price, it might be possible to present the bids as a kind of appraisal (so a reserve price higher than any reasonable bids helps the owner, but just annoys the bidders).

Reply to
whit3rd

OK. So, you're saying "visibility". I guess I could go with that. ???

On this car auction thing, you always here the guy running say "if we take the reserve off, the price might go higher." I guess I really don't get the underlying logic of that.

Maybe folks won't bid if they think they will never get close to the reserve price (so why bother?) But then, the reserve is secret anyway until it is met, so why not bid?

It's like not putting a bid in on eBay if you think you won't win.

Reply to
mpm

It may depend on the laws governing that particular auction. In some jurisdictions, 'shill bidding' by the seller is legal only below the reserve price. So if the seller wants to pump up the price, they raise the reserve, enter their own bid for some amount just below that price and hope that other bidders will counter and drive the price up further.

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Paul Hovnanian     mailto:Paul@Hovnanian.com
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Necessity is the mother of invention, sufficiency is her lazy childless
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Paul Hovnanian P.E.

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