The Economic Logic blog drew my attention a new type of auction which began on websites like BidHere or Swoopo. This auction called Pay-to-Bid or literally auction to pay offer. What is this scam?
These are auctions where the action is not free to bid. On the site in question, either Once someone decides to bid, he must pay 60 cents to raise the price of 2 cents.
Seen from afar, it seems like a good deal because the amount achieved by the auction seems to be significantly lower than the retail price for most products. This is confirmed by a recent study showing that the final price at which the objects go on sale on average five times less than the price in store.
Nevertheless, two remarks. First, consider a randomly generated, such as a Playstation 3. At a time when I write, the level Bidding is around $ 50 for a product that is 300. If the auction has started, for example, $ 10, then there was 2000 on auction this product, which, at $ 0.60 bid, is $ 1,200, or 4 times the price of the product! !
Second, the system is designed so that after each auction, a countdown of 15 seconds starts. If nobody outbid, the product is sold to the highest bidder. Consumers are tempted to start bidding wars that are facilitated by the presence of an automatic bidding system: Consumers can ask the software to automatically bid for them. But in doing so, we enter a vicious circle: the more bids on a long product, the less one wants to drop the case! If you already outbid forty times on the Playstation 3 (or any other product), it has cost you $ 24. If you lose the auction, $ 24 will have been spent in vain. So there is a threshold at which it no longer wants to go back and we're willing to spend huge sums to win the auction, otherwise we will have more than his eyes to cry.
The study I quoted above do not seem moved by the problems posed by this type of auction. Yet this kind of site is successful, at best, a situation where consumers are the luckiest win deals to the detriment of consumers the less fortunate (like an online gaming site but without having the appearance!) and, at worst, to a situation where some consumers are going to ruin because they find themselves caught in the vicious circle described in the preceding paragraph.
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