International Law

Real Dollar Auction Game

Image via Wikipedia

Here is a real life dollar auction game.

"I was fascinated to discover the auction hybrid site swoopo.com (previously known as telebid.com).

It's a strange combination of eBay, woot, and slot machine.

Here's how it works: You purchase bids in pre-packaged blocks of at least 30.

Each bid costs you 75 cents, with no volume discount. Each bid raises the purchase price by 15 cents and increases the auction time by 15 seconds.

Once the auction ends, you pay the final price.

I just watched an 8GB Apple iPod Touch sell on swoopo for $187.65. The final price means a total of 1,251 bids were placed for this item, costing bidders a grand total of $938.25.

So that $229 item ultimately sold for $1,125.90.

But that one final bidder got a great deal, right?

Maybe. Even when you win, you can lose. Remember that each bid costs you 75 cents, while only increasing the price of the item 15 cents. If you bid too many times on an item -- or if you use the site's "helpful" automated BidButler service, which bids on your behalf -- you'll end up paying the purchase price in bids alone.

For this item, if you bid more than 305 times, you've paid the purchase price -- and only raised the cost of the item by $45.75 total.

OK, so bidding a lot is a bad idea, so maybe we only bid one time, or a few times, and near the end of the auction?

Great plan, except the auction is extended 15 seconds each and every time someone bids in those final seconds."

Saw this first at Marginal Revolution, which did comment on the dollar auction game.

Over at coding horror, the thread seems to be split between revulsion and admiration for getting people to pay for a small amount for the "bidding" on a name brand good in an auction.

This is an interesting problem to figure how to game the auction --but, there is no guarantee that the auction house actually has the items to ship. Calls for a pass.

Full post as published by Misleading Advertising Law on December 15, 2008 (boomark / email).