Mathematical analysis by researchers confirms Snipers have more fun

[mandy]

The best way to win an online auction is to wait until the very last moment before making a bid in the hope no one else will have time to respond.

This strategy is already practised by many auction aficionados and is known as "sniping". Now a mathematical analysis by researchers from Seoul National University in Korea has confirmed that it gives the best chance of winning.

Byungnam Kahng and his colleague Inchang Yang analysed more than half a million auctions on the US and Korean versions of the auction site eBay in an effort to determine the best strategy for bidding. They saw a mathematical pattern in the bidding behaviour of bidders and derived a simple power-law equation to describe this...

full article: http://www.newscientist.com/article/dn93...ebay-.html

From the research paper:

Online auctions have expanded rapidly over the last decade and have become a fascinating new type of business or commercial transaction in this digital era. Here we introduce a master equation for the bidding process that takes place in online auctions. We find that the number of distinct bidders who bid k times up to the tth bidding progresses, called the k-frequent bidder, seems to scale as nk(t)~tk–2.4. The successfully transmitted bidding rate by the k-frequent bidder is likely to scale as qk(t)~k–1.4, independent of t for large t. This theoretical prediction is close to empirical data. These results imply that bidding at the last moment is a rational and effective strategy to win in an eBay auction.

you can buy : access to the full study here: http://scitation.aip.org/getabs/servlet/GetabsServlet?prog=normal&id=PLEEE8000073000006067101000001&idtype=cvips&gifs=yes

[mandy]

An article on the study

Thank goodness for science. How else would we know the best way to nab those barely-used weed whackers, dumbbells or duck-shape salt shakers on eBay? In a study that gives the lie to the notion that eggheads don't like to eyeball online auctions like normal folks, a study by South Korean physicists confirms via some elaborate mathematical modeling that "sniping" — waiting for the very last second to submit your bid on that Elvis-shape throw rug — is indeed "a rational and effective strategy to win in an eBay auction."

Founded in 1995, eBay is the king of online auction sites. Sellers put up items for sale and buyers bid up the price. Thanks to the Internet's lack of state sales tax and the public's thirst for other people's garage sale items, the company has grown into a firm that amassed $4.55 billion in revenue last year. The service sets a deadline on bids for items, which has given rise to the practice of "sniping," bidding at the last minute to deny other bidders time to outbid you...

full article: http://www.usatoday.com/tech/science/col...ebay_x.htm