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TomC
PostPosted: Thu Jan 17, 2008 4:37 pm    Post subject: Dutch auction FAQ

Howdy,

I also noticed an error in Gixen's Dutch Auction discussion in the FAQ: You do NOT always pay your full bid as it says in this Gixen FAQ:

"If I enter my maximum bid in Gixen, will I have to pay that amount if I win?

Not necessarily (except for Dutch auctions). All Gixen does is enter your bid on eBay just before the auction closes, and then eBay's proxy bidding system takes over. The winning bid amount will be the second-highest bid plus up to one increment, which could be much less than your maximum bid. Thus, you should always enter your maximum bid in Gixen, just as you would if you entered it manually directly on eBay. An important exception are Dutch (multiple-item) auctions, in which you pay what you enter (provided you win). "

I suggest this answer:

"Not necessarily. All Gixen does is enter your bid on eBay just before the auction closes, and then eBay's system takes over. In proxy bidding, the winning bid amount will be the second-highest bid plus an increment, which could be much less than your maximum bid. Thus, you should always enter your maximum bid in Gixen, just as you would if you entered it manually directly on eBay. Even in a multiple-item (Dutch) auction, the per-unit price is the lowest winning bid, so as long as you aren't the only bidder, the final price could be less than your bid. "

That said, bidding strategies on Dutch auctions are similar to proxy auctions as long as you aren't the only bidder. The main reason to snipe is still there: to not allow yourself or anyone bidding against you to get caught up in a bidding war. And the main strategy is the same: put your snipe in for the maximum price you want to pay for the item and if you get it for less, that's great.

Beyond that, I can think of a couple of subtleties peculiar to Dutch auctions.

There are no proxy bids or increments, so adding a few pennies to you bid might make the difference between winning and losing. I haven't actually seen this, but it seems like it should work.

It is more important for all the bidders on a Dutch auction not to over-bid, because the lowest winning bid is the final price, not an increment above the highest losing bid. This isn't likely to make a big difference, but if all the winning bidders bid high to make sure they will win, they can easily bid themselves up and all pay a higher price than they might've gotten. This is obvious when you are the only bidder; Then the price you bid is the price you pay.

When there are many bidders though, a Dutch auction is about like a regular proxy auction: You bid the max you want to pay and see if you win.

Tom
the3coopers
PostPosted: Thu Jul 19, 2007 3:53 am    Post subject:

Unfortunately I couldn't test what happened with Gixen and Dutch Auctions today, as my bids didn't fire due to the ebay configuration change and Gixen downtime.

Here's a very good explanation of how to win Dutch Auctions, including a small part on sniping :

vendio.com/service/tipsandtactics/buy-windutch.html

And this webpage is not bad either, but much less detailed :

dummies.com/WileyCDA/DummiesArticle/id-1341.html

Anyway - what is absolutely sure is that all winners pay the lowest successful bid. But there is always the possibility that you'll get edged out and become the lowest successful bidder yourself, in which case you will pay your maximum. Confused
mario
PostPosted: Wed Jul 18, 2007 8:18 am    Post subject:

Sounds good, I'll include the link in the warning message.

Thanks for the useful info.
the3coopers
PostPosted: Wed Jul 18, 2007 8:09 am    Post subject:

I never understood why ebay has that wierd Dutch Auction format either

What I do know is that a LOT of people get caught by them, and pay more than they really wanted to.

Yes, I agree that it's impossible to explain a Dutch Auction here at Gixen. How about a link to that USA help page?

-------------

For everybody's information, I will report back here with how Gixen went on my 2 Dutch Auctions tommorow.
mario
PostPosted: Wed Jul 18, 2007 7:34 am    Post subject:

I don't think I can explain how dutch auctions work in one warning sentence only. What I thought was important is to warn users proxy bidding doesn't work, and then users can investigate this further.

If dutch auctions work the way you just described, then I'm confused even further. I still don't understand why proxy bidding (second price vickrey auction + increment) could not be applied to dutch auctions.
the3coopers
PostPosted: Wed Jul 18, 2007 2:53 am    Post subject: Warning message for Multiple Item Listings (Dutch Auctions)

Hi Mario

I just set up a snipe on a Dutch Auction (Multiple Items) at the start price, then I edited it and raised the price that I am prepared to pay. Gixen warns me :

Warning: eBay does not support proxy bidding for multiple item listings. Your maximum bid is the actual price you will pay if you win, and this is per item.

That message is not quite correct - well not on the AU site where I am bidding - please see this help page (add usual prefix)

pages.ebay.com.au/help/buy/buyer-multiple.html

In my example there are 7 items available, and I want 2. Start price is $10 and there are currently no bids. Say I enter $11 in Gixen. If I am the ONLY bidder, then I will win and must pay $11 each. But if someone else bids $10 each for (say) 3, there will still be 4 left and I will win my 2 for $10 even though I bid $11 !!

Dutch Auctions are amazingly confusing at the best of times... so I don't know if I am much help in explaining this. My only suggestion is to slightly reword the Gixen warning, to say something like :

Warning: eBay does not support proxy bidding for multiple item listings. If your offer is the lowest successful bid (or you are the only bidder) then your maximum bid is the actual price you will pay if you win, and this is per item.

Perhaps include a link to the Help page - I think that the US site explains it slightly better than the AU site :

pages.ebay.com/help/buy/buyer-multiple.html

There is a special "technique" to winning multiple item auctions - and sniping still gives a big advantage. The reason is that if you snipe at a high price for only SOME of the quantity, then unless you are the ONLY bidder you will win the items you want at the lowest price that anybody has bid.

So, using my example above - I could bid $20 or even $30 each for 2 of the 7 items, and if somebody else bids for all 7 at $10 each then I will be guaranteed to win my 2 but I will only pay $10 each! Therefore, using a snipe is a good way to win - providing that you ONLY snipe for only SOME (and not all) of the quantity.

Wow - that is SO hard to explain Shocked Now - what exactly was I suggesting here in this post? LOL Laughing

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