Snipers, Shills, and Sharks

eBay and Human Behavior

By: Ken Steiglitz

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Hardcover | 12 June 2007

At a Glance

Hardcover
304 Pages

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23.4 x 15.2 x 2.54

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Every day on eBay, millions of people buy and sell a vast array of goods, from rare collectibles and antiques to used cars and celebrity memorabilia. The internet auction site is remarkably easy to use, which accounts in part for its huge popularity. But how does eBay really work, and how does it compare to other kinds of auctions? These are questions that led Ken Steiglitz--computer scientist, collector of ancient coins, and a regular eBay user--to examine the site through the revealing lens of auction theory.

The result is this book, in which Steiglitz shows us how human behaviors in open markets like eBay can be substantially more complex than those predicted by standard economic theory. In these pages we meet the sniper who outbids you in an auction's closing seconds, the early bidder who treats eBay as if it were an old-fashioned outcry auction, the shill who bids in league with the seller to artificially inflate the price--and other characters as well. Steiglitz guides readers through the fascinating history of auctions, how they functioned in the past and how they work today in online venues like eBay. Drawing on cutting-edge economics as well as his own stories from eBay, he reveals practical auction strategies and introduces readers to the fundamentals of auction theory and the mathematics behind eBay.

Complete with exercises and a detailed appendix, this book is a must for sophisticated users of online auctions, and essential reading for students seeking an accessible introduction to the study of auction theory.

Industry Reviews

"The book does a lot more than just explain why eBay works the way it does, however. As promised in the subtitle, Steiglitz also explores the quirks of human behavior in auctions, both on eBay and elsewhere, which have as much to do with psychology as with brute economic logic... Steiglitz's book is an admirable achievement: a short, readable account of the economic theory of auctions that doesn't pound the reader into stupefaction with equations or some of the other dry-as-bones notions economists often invoke."--Mark Buchanan, New Scientist "In this interesting, well-written book, Steiglitz summarizes the basic literature on auction theory, with particular emphasis on eBay auctions...It will...be of interest to anyone who wants a basic introduction to auction theory or who uses eBay."--D.F. Sheets, Choice "What Steiglitz does well is discuss the quirks of eBay. He himself is a regular user and this allows him to comment with some authority upon the many different patters of observed behaviour...This is an interesting book, providing a fascinating insight from an important real-world auction market, and this will provide motivation to delve deeper into the subject to many a non-expert reader."--Mark Williams, The Business Economist "General readers interested in either behavioral economics in general, or auction behavior in particular, will find Snipers, Shills, and Sharks to be entertaining and informative read. Naive users of eBay will find it particularly useful since, as Steiglitz points out, many otherwise well-educated and informed people do not truly understand how the system works."--Sarah Boslaugh, MAA Reviews

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You Can Find This Book In

Non-Fiction Mathematics Optimisation Game Theory Computing & I.T.Economics Economic Theory & Philosophy Psychology Industry & Industrial Studies Distributive Industries Retail Sector Business & Management

Business Aspects of E-Commerce Sales & Marketing Market Research

Preface	p. xiii
To the general reader	p. xiii
To students and course instructors	p. xiv
Synopsis	p. xv
Acknowledgments	p. xix
English and Vickrey Auctions	p. 1
Auctions	p. 1
A Brief History	p. 5
English Auctions	p. 8
Variations on the English Theme	p. 10
Truthful Bidding is Dominant in (Japanese Button) English Auctions	p. 12
Sealed-bid Second-Price (Vickrey) Auctions	p. 14
Mail-bid Auctions	p. 16
Weak Strategic Equivalence of (Japanese button) English and Vickrey Auctions	p. 17
The Four Standard Auctions and Why They Are Two Pairs	p. 18
Disincentives to truthful bidding	p. 21
Questions	p. 22
From Vickrey to eBay	p. 25
eBay as an Evolutionary Product of Vickrey: The California Auction	p. 25
Other Online Auction Rules	p. 28
eBay [not equal] Vickrey	p. 30
Summary	p. 32
Questions	p. 32
eBay Strategies Observed	p. 34
Some Bidding Histories	p. 34
Start and End Clustering, Snipers	p. 34
A Bidding War	p. 36
An Early Bidder and Her Fate	p. 38
"Enter Your Maximum, Then Sit Back and Watch!"	p. 39
Good Reasons to Snipe	p. 40
Other (Generally Good) Reasons to Snipe	p. 43
Bidding Wars, Response to Incremental Bidding	p. 43
Implicit Collusion	p. 44
Nonstrategic Reasons to Bid Late	p. 45
Some (Questionable) Reasons to Bid Early	p. 46
Uncertain Values and the Cost of Discovery	p. 46
Scaring Away Competition	p. 47
Nonstrategic Reasons to Bid Early	p. 50
On Balance, Snipe	p. 51
Seller Choices	p. 51
Opening Bid	p. 52
Use of a Secret Reserve	p. 54
Use of the Buy-It-Now Option	p. 56
Other Seller Choices	p. 57
The Next Three Chapters	p. 60
Questions	p. 61
What If eBay Were First-Price?	p. 65
First-Price Is the More Natural Assumption	p. 65
The Sealed-Bid First-Price Auction	p. 66
The Simplest of All Worlds	p. 67
The Independent Private Values (IPV) model	p. 67
How to Shade	p. 71
Revenue: The Bottom Line	p. 73
A First-Price eBay Would Discourage Early Bidding	p. 74
First-Price Is More Work for the Bidder	p. 75
Further Theory Disappoints	p. 76
Conclusion	p. 77
Questions	p. 78
The Signals that Sellers Send	p. 79
Reserves	p. 79
Price Estimates and Related Revelations	p. 81
Virtue Rewarded, in Theory	p. 83
Art, Silver, and Jewelry Auctions: Empirical Observations of Seller Price Estimates	p. 86
The Complexity of the Seller's Signaling	p. 88
What Theory Has To Say About Reserves	p. 90
The Tradeoff in Second-Price Auctions	p. 91
The Tradeoff in First-Price Auctions	p. 91
The Optimal Reserve	p. 92
The New Equilibrium	p. 92
Practical Implications	p. 94
Field Experiments	p. 95
A Field Comparison of Public vs. Secret Reserves on eBay	p. 99
Lucking-Reiley's Magic Window in Time	p. 100
Field Confirmation of Some First-Price Theory	p. 101
Flatness of Revenue vs. Reserve Curves	p. 102
The Importance of the Extra Bidder	p. 104
Extracting Some Advice for the eBay Seller	p. 105
Questions	p. 107
Prices!	p. 108
Appraising the Scaffolding	p. 108
Valuations	p. 109
Equilibrium	p. 111
Homo economicus	p. 111
Overbidding: Some Classroom Experiments	p. 112
Experiment 1: First-price with Uniformly Distributed Valuations	p. 113
Experiment 2: First-Price with Less Competition	p. 114
Feedback and Learning	p. 116
Feedback in First-Price Auctions	p. 117
Feedback in Second-Price and English Auctions	p. 117
Overbidding: Jars of Nickels	p. 118
Results from the Field: Tests of Revenue Equivalence	p. 120
Magic on the Internet: A Surprise	p. 121
Music CDs and Xboxes on eBay	p. 123
Reconciliations	p. 125
Equilibrium Regained	p. 125
Risk Aversion	p. 126
Spite: An Alternative Theory	p. 130
The Theoretically Informed (and Human) eBay Bidder	p. 134
Simply a Mistake: Bidding Untruthfully in Vickrey's Setting	p. 135
The Winner's Curse	p. 135
Lessons from the Failures of Revenue Equivalence	p. 137
Spiteful Behavior	p. 138
Wars, Frenzies, and Bubbles	p. 140
Questions	p. 147
Transgressions	p. 150
Shills	p. 150
Shill Bidding and Theory	p. 155
Mock Auctions: The More Important Diamond	p. 157
Bidder Rings: 84 Charing Cross Road	p. 158
Ethics	p. 162
The Twinge of Guilt: The Buyer Withholds Information	p. 162
Conversely: The Seller Withholds Information	p. 163
Sniping	p. 164
Shadowing Bidders	p. 164
The Ethics of Feedback	p. 165
Exporting and Importing Ancient Artifacts	p. 166
A Note on Downright Fraud	p. 168
Fakes	p. 169
Questions	p. 173
Epilogue	p. 174
Looking Back	p. 174
Looking Ahead	p. 176
Vickrey's Genesis	p. 179
Introduction	p. 179
A Preview of Revenue Equivalence	p. 180
Quick Review of Some Probability Theory	p. 183
Order Statistics	p. 185
Revenue of Second-Price Auctions	p. 188
First-Price Auctions and Nash Equilibria	p. 189
Revenue Equivalence of First-and Second-Price Auctions with Uniformly Distributed Values	p. 190
A Nash Equilibrium for First-Price Sealed-Bid Auctions	p. 192
Revenue of First-Price Auctions	p. 197
Conditional Expectation	p. 198
An Interpretation of First-Price Equilibrium Bidding Strategy	p. 200
Stronger Revenue Equivalence	p. 200
Dutch Auctions and Strategic Equivalence	p. 202
Another Kind of Auction-the All-Pay Auction	p. 203
Questions	p. 205
Riley and Samuelson's Optimal Auctions	p. 207
Definition of Riley and Samuelson's Class	p. 207
Revenue	p. 208
Optimal Reserve Price	p. 211
Example: First-Price Auction with Reserve	p. 213
Example: Second-Price Auction with Reserve	p. 215
Sad Losers and Santa Claus	p. 216
The Sad-Loser Auction	p. 217
The Santa Claus Auction	p. 219
The All-Pay Auction Revisited	p. 222
Risk Aversion	p. 224
Point of Departure	p. 227
Questions	p. 227
Myerson's Optimal Mechanisms	p. 230
Directions	p. 230
Interdependent Values	p. 231
Asymmetric Bidders	p. 235
Efficiency	p. 236
Myerson's Optimal Mechanism in the Asymmetric-Bidder Case	p. 239
Interlude: Revenue Equivalence Revisited in the Asymmetric-Bidder Case	p. 242
The Optimal Allocation Rule	p. 244
The Payment Rule	p. 247
A Wrinkle	p. 248
Is This Practical?	p. 248
Optimal Riley and Samuelson Auctions Are Optimal Mechanisms	p. 249
Auctions vs. Negotiations	p. 249
Summary	p. 252
Questions	p. 253
Laboratory Evidence: A Summary	p. 254
Introduction	p. 254
Laboratory Experiments	p. 255
Experimental Results for the IPV Model	p. 256
Experimental Results for the Common-Value Model	p. 259
References	p. 263
Index	p. 271
Table of Contents provided by Ingram. All Rights Reserved.

Snipers, Shills, and Sharks

eBay and Human Behavior

At a Glance

Hardcover

Industry Reviews

Shipping

How to return your order

Defective items

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