Aspects of Bidding

Introduction

The 21st century has seen bidding auctions go online a great step towards making life in the business world faster and more efficient. One of the most reputable online based auctions of the day is the eBay site. Auctioning as is generally perceived refers to the provision of goods or services for sale and disposing them to the buyer with the highest bid. Online auctioning is equally competitive exhibiting various bidding behaviors some of which are hereby discussed.

Reputation bidding

This form of bidding behavior which is at times referred to as loyalty bidding is dependent on the relationship built between a potential seller, say a company, and a potential buyer. As is unlike the case in other behaviors former transactions play a major role in dictating the progress of a current transactions. The mind of customers is controlled by what they believe about the selling company, their loyalty to it and the treatment they may have or may have not received in former transactions. This auctioning behavior experience unpredictable trends with non-economic factors coming into play.

Bidding across competing auctions

This minimum price bidding behavior involves a potential buyer bidding across a network of other competing auctions. Bidders submit their bids with the least standing and the highest bidder would then pose until is outbid by others. In this bidding behavior the prices of goods are highly sporadic with little predictability. The bidders are likely to be tempted to buy goods at much higher prices. Consider a situation in which there are four bidders and two auctions in competition. In case sellers’ values their products at 0€, while bidders’ values theirs at 4€, 5€, 9€, and 10€. Let each bidder select only one auction in which they bid their true valuation only once. There are chances that the highest bids fall in