well said
 

Amen to the irrational behavior at 2am! I am a numbers in my head guy and when bidding, i always do the 20% math mental add-on. I must confess, however, that I have also been guilty of buying the same card twice in an auction unintentionally due to the above-mentioned sheer exhaustion at 2am. Auctions bring out irrational behavior in collectors. They just do. I have tried to figure it otherwise, but they just do. Very interesting thread. Thanks to all who have contributed.

Auctions would bring out the same irrational behavior at 2AM whether the premium was explicitly calculated in or not. Heritage does the math for you, but I don't see their prices hurting. According to Paul's Wikipedia psychology they should be doing worse than AH's that allegedly "hide" the premium.

And Bob you can try to personalize this to me but it isn't me at all, it's the overwhelming majority of people who understand this very simple concept.

Absolutely +1
 

I bid a lot in the AH's. The BP is listed in the auction summary. I do the math and I bid if it makes sense. 10%, 15% or 20%, Its simple math.

agree
 

It is simple math. It is clearly spelled out. Take it or leave it, it is there and it is not going away. If it is too big of a deal, cards need to be purchased elsewhere. Pretty simple really

I agree that at a major sports auction with high end items and sophisticated collectors the prices will equal out no matter the buyers premium. I am not a high end collector and was giving my opinion based on the lower end perspective.


I was also speaking to auctions attended in person, not online where the Bp is factored for you.

yep.

People don't like to lose and they get emotionally invested in an item that they bid on. Honestly, I would estimate the majority approach auctions in such a way.

+1

Of the four most valuable cards that I own,three of them were bought from AHs. And I always knew how much I was bidding with the BP.

Whether all, some, or most collectors choose to include the BP in their bidding activities, the auction houses that separate the BP from the bid are trying to anchor the bids at a lower value than what is being spent so as to encourage additional bidding. It is a ploy. Whether it works or not is in the eye of the beholder.

And your evidence for this is?? Your say-so? And if you are accusing auction houses of attempted deception, why don't you name the ones you think are guilty?

I don't have any problem following the logic of his argument Peter, with or without empirical data to back it up. Again, if the BP has no influence on final price or bidder's behavior, why is it that no auction house, as in none, does away with it and take its cut from the seller/consignor? Consignors really should have no rational problem with that if their bottom line is the same right?

Industry custom and practice, Todd. Nothing to do with trying to deceive buyers. As I recall seller's premiums used to be much more in vogue. At some point someone probably had the notion that they could compete for consignments better by advertising a lower seller's premium and others followed suit. That is what this article from an art site suggests, even though of course the issue for the consignor really is the total premium not the seller's premium.

"The buyer's premium is the fee added to the hammer price at auction, but don't be fooled by the term - it's really paid by the seller. Buyers decide how much they want to pay, and take off the premium to work out the maximum hammer price they're willing to bid. If the buyer's premium increases, they compensate by reducing the hammer price they are willing to pay. If a dealer is willing to pay £20k for a picture bought directly from a collector, they're not going to pay £25k for the same picture from auction because there's a 25% premium - the dealer can't sell for a higher price just because they had to pay a buyer's premium.




The seller is paying for the auction house for its services. A higher buyer's premium means that the seller will receive less of the proceeds - so if you're selling through an auctioneer, focus as much on the buyer's premium as on the seller's premium. Over the past few decades there has been a shift from charging seller's premium to charging buyer's premium. Indeed, the average premium income at Sotheby's (buyer's premium plus seller's premium) was just 16.6% in 2011 and 16.3% in 2012, according to their annual report (p.25). Sellers sometimes even pay a negative premium - i.e. they will receive a share of the buyer's premium. Christie's doesn't publish these data because it is privately owned, but I suspect theirs is a bit higher because they sell more lower-valued lots that attract a higher premium.




The shift to buyer's premium has been driven by competition to win consignments. Buyers can't negotiate - it makes no sense to agree a deal where the buyer pays a low premium, but the underbidder would have been charged the full premium. Negotiation takes place with sellers."

Thanks Todd... looking forward to getting the Matty in hand. Should be here tomorrow!

Al

Premium
 

If I was an auctioneer I would separate it, whatever the level, to show the seller he will get the full amount bid. But I am just a buyer and the premium does not matter to me as long as I know what it is. I am not trying to convince anyone this is the best way to look at it. It's just how I look at it. Not sure there is a right or wrong answer here. To each their own way of looking at it

Seriously? Well, okay. Here's some basic research and empirical data on the topic:

"Morwitz et al. (1988) found that auction bidders agreed to pay more in total cost in an auction when a 15 percent buyer's premium was charged separately than in one in which there was no buyer's premium. The anchoring effect observed in partitioned pricing has subsequently been replicated and extended in several studies (e.g., Bertini and Wathiey, 2008; Chakravarti et al., 2002)" For complete citations, click here:

https://books.google.com/books?id=22...horing&f=false

The entire Morwitz article is available here:

http://www.researchgate.net/publicat...tioned_Pricing

newer research
 

The starting point of our investigation has been the fact that the
authors of existing studies on effects of price partitioning came up
with contradictious findings. Our study was intended to have a
closer look at the mechanisms which underlie price partitioning
effects. The results of our study show that price partitioning leads
to a more favorable evaluation of the total price level, but to a higher
perceived complexity of the price structure and to a higher perceived
manipulative intent of the marketer than does using total
prices. The overall effect of price partitioning on product evaluation
proved to be negative compared to using total prices which is due
to the fact that the negative effects of price partitioning through
perceived complexity of the price structure and manipulative intent
outweigh the positive effect through the evaluation of the total price
level. The contradictious findings of previous studies might be
traced back to the fact that the authors did not analyze all of these
paths. Thus, summing up our results, we can say that marketers
should not use partitioned prices because the disadvantages of this
pricing technique outweigh the advantages. Provided that a marketer
has to use partitioned prices for some reason (e.g. because
partitioned prices are common or regulated by law in his industry),
we can derive from our findings that monetary surcharges should be
preferred over percentage surcharges because when applying monetary
surcharges, prices are perceived as being less complex and the
marketer is supposed to have a lower manipulative intent than in the
case of percentage surcharges.
http://www.acrwebsite.org/volumes/v3...r_vol35_30.pdf

So doesn't that mean they shouldn't use buyers premiums because Morons like me think we're being ripped off by it?

I agree, of course, that "the marketer is supposed to have a lower manipulative intent than in the case of percentage surcharges," but I was talking about using partitioned pricing in the auction environment. The Morwitz study cited above referenced an auction study. Whether partitioned pricing has a negative effect on the market in most other contexts is irrelevant. Frankly, if partitioned pricing worked in the grocery store then what you would see would be buyer's premium's at checkout! Imagine that!

At the grocery store, yes. But, in the auction market the evidence is to the contrary.

Attachment 201675


& Congrats to Leon on the auction as well ( and the bidders).

Paul

Hahaha. I really think a big part of it is the two worlds of auctions. I have always hung around auctions where a few hundred dollars is a lot of money. Unsophisticated junk dealer types and middle class moms looking for collectibles. I get that at the high end people get what the overall cost is.


By the way, sophisticated investors understand brokerage fees but retail folks sure do not.

One 1988 or whatever it was study of one auction doth not science make. And i see no reason why the newer study wouldn't apply to auctions, buying is buying. In any event, I do not believe that buyer's premiums are charged by sports auction houses with an intent to manipulate the buyer into bidding more. I think it's much more likely a response to a trend which saw auction houses trying to compete by lowering seller's commissions, however irrational that was. Paul if you think otherwise, why don't you name the ones you think are trying to trick us? Or do you think it's all of them, making a conscious choice to try to trick us?

More from the 2009 Morwitz article, which is really fascinating reading:

With respect to eBay strategies...

"While the results varied for high versus low total reserves, across the two products, and across particular CDs and games, in general they demonstrated that auctions with lower opening bids and higher shipping charges attracted more bidders, and generated higher total revenues, compared to higher opening bids and lower shipping charges. For example, setting an opening bid of $0.01 and shipping of $3.99 for CDs resulted in a higher average number of bidders (4.5) and revenue ($10.14) than setting an opening bid of $4.00 and no shipping charges (3.9 bidders, $7.54 average revenue)."

Honestly, I view our argument as a waste of time. But, I have enjoyed finding substantial empirical evidence to show the impact of price partitioning, which many of us on Net54 intuitively knew was going on. Frankly, I am not sure why you would take such a strong position to the contrary. I don't get it. But, then, I don't care.

I would think (or hope anyhow) that the sophistication of people spending hundreds or thousands of dollars in high end sports auctions is a little higher than people buying 10 dollar items on ebay. This thread could prove me wrong though. :eek:

For the plain and simple reason that I have more faith in the intelligence of our community than you do. As a result, I do not believe that sports auction houses who understand the intelligence of their market charge buyer's premiums with the intent of tricking people into spending more money. Are you saying that is Leon's intent? Al's? Lee's? They charge BPs after all. In other market segments, notwithstanding the newer research showing it is an unsuccessful strategy, maybe that is the intent. I don't believe it is here. It's just my opinion.

I agree with you the research as a whole is interesting, though.

I wasn't arguing with you. I thought it was an interesting study on ebay auction behavior, since many of us participate in ebay auctions.

As you can probably tell, I enjoy reading about buyer and selling behavior in auction formats since I participate in so many different auctions.

I would guess most auction houses will tell you that they separate the buyer's premium from the hammer price in order to reward their consignors by taxing the buyer. But, there is significant empirical evidence that such practices actually drive final costs up, and that the auction houses are well aware of that. Frankly, enough articles have been written about it to fill a small library.

I've taken part in anchoring surveys with a group of intelligent folk. We all fall for the same tricks every time. It's more of a human nature thing than an intelligence thing.

Then do you discount the newer study suggesting that the very perception that it is a trick renders the strategy ultimately unsuccessful?

We are getting circular here. First, the article I am citing to and provided above is from 2009. That's the latest Morwitz article. I don't think the article you cited was more recent than that. But, in any event, I am talking about partitioned pricing in the auction environment, which is different than in the standard marketplace for the reasons you have already mentioned. Indeed, the fact that you and a substantial number of Net54 members do not believe they are being tricked means that the strategy may actually be working.

Now that sounds even more circular.:) In any event we can agree to disagree I guess.

Sure. Horse beaten. :D

Man I can't wait for HA shipments to arrive so we can post, ya know, baseball cards, on this thread

.

Since we been complaining about the shipping charges so much in this thread, figured I would post the package I got from Heritage today. At least we know we're getting $19 worth of packing materials. And yes, that is the only thing I won that was in the package.

http://i1065.photobucket.com/albums/...image.jpg1.jpg

DJ

:eek::eek::eek::eek:
That's pretty funny DJ. Maybe they didn't want someone to know there was a card inside ;).

maybe it should be called "shipper's premium" for now on.

The original intent of the thread was to announce the end of an auction. I think that train left the depot a while back. You guys can start a thread about anything you want to.....including shipping fees, interest on shipping fees, baseball cards etc......but this thread ran it's course. Thanks again to everyone how bid in the auction. I hope everyone got something they wanted. And I know there were some great buys on great cards. I couldn't be happier than to have the proverbial win-win situation.

ps...and honestly, after a week or more, I am also tired of seeing my name in the limelight so much.

pps, even though I would like to see the thread go to another page I guess if folks must post in this thread....then so be it. I hope it doesn't surpass the Monster number thread....carry on....(and ya'll at least know my feelings on the subject :))