There’s one website my friend told me today about an auction. Instead of the Ebay model, it is somewhat different. How?
Instead of the highest bidder, the item bid for will go to the…wait for it…LOWEST bidder! Yes! Unbelievable? It is! Of course, there are some twist to the story. Otherwise, everyone will bid the lowest price, which in this case is $0.01. So then, what is the twist?
It’s easy, the condition (the twist) is, the lowest bid will win. And only the ONLY lowest bid will win. It means that if there are 9 bidders, and 8 of them bid an item for $0.01, and the last man bid for $0.02, the $0.02 bidder will win since he’s the only one with the $0.02, which by far is the lowest single bid there is. Understand?
Now, let me tell you why instead of $0.01 that people expect to pay, people will pay only several percentage points lower than the stated retail price. Say an item is worth $289 at retail, people will actually pay around $250 instead of the expected $0.01.
It goes like this: there are 3 person; A, B, C. They all know the conditions. A will bid item D worth $100 for $0.01. B will also bid $0.01, however, he knew that A will bid $0.01, and thus B knows there since there can only be a single lowest bidder, having two $0.01 bidder will not do, and thus B will raise his bid a little, hence bidding $0.02. Now it’s C turn to bid. C knowing A will bid $0.01, and so will B, C will try to bid $0.02. But he knows that if he bid $0.02, A will also try to bid $0.02 in the believe that B and C will bid $0.01.
This will go on and on in the believe that each of the other one will bid a higher bid than the previous bid, thus raising the bid price higher with every bid, each bidder bidding in the believe that their bid is the only single lowest bid.
I apologize as I am not able to put the explanation succinctly. However, that is the gist of what I’m trying to convey. And that is why these kind of bidding will use psychology to sell at a higher price than realized.
Till next time.
