[FoRK] eBay has a broken auction model

Gordon Mohr gojomofork at xavvy.com
Fri Mar 11 20:30:54 PST 2005

Sounds like you were cheated, somewhat. Console yourself a little with
knowing that the "winner's curse" usually means an auction winner has
paid too much.

Seems like some of these problems could be tweaked by EBay, and they
might have an incentive to do so, if it makes sellers more comfortable.
(But given the winner's curse, they probably *don't* want perfect
auctions from the seller's perspective, lest buyers drain away after
always overpaying.)

I don't see why they need to show whether the reserve has been met until
after the auction is over.

I saw in a recent blog entry about sniping for expired domains that
one of the registrars auctions off domains its gets in a format that
requires X minutes of no-bids before closing the auction. Seems like
EBay could offer an option of such auctions, perhaps with some
absolute latest-extension time.

The big problem is that EBay is entrenched, with major monopoly power,
and network lock-in effects. Their listing agreement effectively
prevents you from offering something via two auction sites, and taking
the highest bid from either. They aggressively prohibit scraping to
create a meta-site that could draw buyer's searches.

Some ideas (short of antitrust action/regulation) for chipping away
some of their power:

  - List something elsewhere, but list a 'refundable coupon' good
    for buying the other thing on EBay, to plug into their buyer
    flow. Problem: they'd quickly tighten up their policies to prevent
    this (if it's not already prohibited, I don't know)

  - Use a client-side toolbar to intercept EBay searches and
    decorate with alternative site options. Problems: getting
    significant adoption. Another big guy (Yahoo or Google),
    perhaps with a large alliance of sites with them, could
    have a chance. Is the "anti-phishing" EBay toolbar an attempted
    preemptive strike against such a threat?

Other ideas?

- Gordon

Stephen D. Williams wrote:
> Well, I've let my best domain go for a reasonable, but probably not true 
> market value.
> I had three problems with eBay and its (!) users, one of which is a 
> severe deficiency in their model.
> First, someone used an apparently bogus account to bid up the auction to 
> find out what my reserve price was.  This, in the end, limited my take 
> to just over the reserve, even though I canceled the bids (which were 
> still visible).
> Secondly, someone created a listing of similar domain names fraudulently 
> concocted so that it looked at first glance as if the domain I was 
> selling was also being sold in a package.  (They registered 
> "seeDOMAIN.com" and listed it as: "See Domain.com, bla.com, blu.com".)  
> I complained by eBay email and their real-time customer service but 
> nothing was done.
> The biggest issue that I've been burned on a couple times is the flaw in 
> eBay's model.  I can't see any reason they haven't fixed it:
> Auctions should not end until some reasonable time period after the last 
> bid.  This should be at least 1 minute and possibly tunable between 1 
> and 5.  The first guy who bid over my reserve was sniped by another guy 
> with 6 seconds to go and emailed me that he would have bid much more.  
> No real auction operates this way: bidding continues until no one is 
> willing to bid any more.  This probably cost me tens of thousands of 
> dollars and will drastically limit what I put on eBay in the future.
> I know some past Internet auctions have worked this way, but nothing has 
> overcome the network effects of eBay, so hopefully they will fix this.
> sdw

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