[bnorth]

Originally Posted by Exhibitman

The AH hypothetical is not realistic: no consignor who can do math is going to shill an auction already sitting at 90% of past results since it would cost him somewhere on the order of 18% of the value of the lot.

Shilling in an AH would be attractive when the price is way below market and the seller is going to take a giant loss. I'll give you a real world example: Heritage Auctions. HA does two interesting things: it expressly allows consignors to bid into their own lots in return for paying the BP if they win, and it holds unsold lots open for some time as BINs for the minimum bid. I sold a bunch of stuff in November. I did not bid into any of my lots in November. Two of my lots, however, which I was into for ten times the opening bids, were offered as post-auction BINs. I opted to exercise my consignor's rights to BIN them [at the cost of the BP] and avoid taking a 90% loss. The cost to me was effectively 20% of 10% of the cards' value, i.e., 2% of the value of the lots. It was worth 2% to me to take the cards off the market rather than see them sell at throw-away prices and net practically nothing.

This isn't the same as shilling--shilling by definition is illegal and not allowed under the auction rules--so not a perfect analogy, but it is the same financial calculation. To me it was worth 2% to hold my items back. If the cards were at 70% of what I felt was market price I probably would not have gone back into them.

One further note: this whole idea of 'market' is an artifice. We don't have the theoretically perfect flow of information and participation that the model assumes. With all of the auctions around plus eBay the reality is that lots of collectors miss lots of items, which sell for a lot less than they would have otherwise. If information and participation were perfect it would not be possible to flip cards for a profit. I have often had cards go begging on eBay or at auction then suddenly take off and sells in competitive auctions. No rhyme or reason to it, they just got found by the right bidders.

Good to know Heritage Auctions allows you to shill your own items.