Shill Bidding

[ullmandds]

In light of constant talks of shill bidding in the hobby...in addition to me being sick and laid up at home...I've been giving the cincept of "shill bidding" more thought.

Shilling is rampant and in many cases allowed in the auction world. Whether its antiques, collectibles, art or real estate...shilling seems to be a commonly used strategy to ensure the hammer price ends up close to or above sellers "reserve" so as to avoid a higher % of "no sales" which is bad for everyone.

So why should this hobby be immune? I'm in no way advocating this in any way. I think the key is the "reserve." And the problem is that most of the time the reserve is only known to the actually consigner and sometimes the auctioneer...but not revealed to the public.

And the purpose is obviously to encourage spirited bidding. And how boring would an auction be if every card had a published reserve around the retail value.

I recently won a card from PWCC...and there was what appeared to me to be very suspicious...likely shill bidding. I questioned brent and he agreed the bidding was unusual...but he had seen this type of very small incremental bidding to reveal the winning bid before.

And...he said that he knew for sure the next highest bid was legitimate...sooooo. While I appreciated his time and thought I still was a little buggered thinking as we all do...I could have likely gotten the card cheaper.

But maybe this just isn't realistic in this day and age with information and data everywhere. It seems as of the last 10-15 years many have come onto this board asking what a psa 3 cobb(red)...for example is worth...expecting there to be a "market" price for one as if it were an oz. of gold or something.

And we all know there are many other factors that go into the equation than just grade.

So will shill bidding always be around and might it even propogate further?

Sure seems so...unless auctioneers intervene.

I stumbled upon this scientific analysis of shill bidding and possible ways to combat it. IT's very interesting although I skipped all of the calculus...it made my head spin. Maybe frank can explain it to us.

http://oz.stern.nyu.edu/seminar/fa01/1108.pdf

[Pilot172000]

There were several cards last night in particular that I was incrementally bid up on only to lose at the very last second or because I quit bidding thinking it was suspicious. When you lose 7 auctions by the combined price of $8, you wonder a little. I mean it didn't matter if I quit bidding an hour before or at the last minute all of them were my minimal amounts.

[botn]

Originally Posted by ullmandds

So why should this hobby be immune? I'm in no way advocating this in any way. I think the key is the "reserve." And the problem is that most of the time the reserve is only known to the actually consigner and sometimes the auctioneer...but not revealed to the public.

And the purpose is obviously to encourage spirited bidding. And how boring would an auction be if every card had a published reserve around the retail value.

Using a reserve ends up being great for the consignor but as you point out takes on the flavor of more of an asking price which is not in the spirit of an auction where buyers want to feel they set the prices on their own. I tend to think bids protecting the consignment happen more often than we know.

I recently won a card from PWCC...and there was what appeared to me to be very suspicious...likely shill bidding. I questioned brent and he agreed the bidding was unusual...but he had seen this type of very small incremental bidding to reveal the winning bid before.

And...he said that he knew for sure the next highest bid was legitimate...sooooo. While I appreciated his time and thought I still was a little buggered thinking as we all do...I could have likely gotten the card cheaper.

From what I understand as well as my memory of Brent's posts on forums, bidding and bidders have always been legit even if they seem odd. Maybe they are sometimes but he cannot possibly know in your case if a friend of the consignor was placing those small bid increments so to write it off as such is simply his sweeping it under the table.

[Sean1125]

Gixen.com

[Peter_Spaeth]

Originally Posted by Sean1125

Gixen.com

LOL. Too easy I guess.

[Yoda]

I am really naïve about the nuances of shill bidding, not that I really want to know too many details, but am curious about the end game with a major card
in a major auction with a major auction house. (Harvard Business School has assuredly already picked up on the Mastro debacle as a good case study.) Presumably, a shill bidder if his bid won the auction would be held harmless by the consignor and be reimbursed for winning. Some kind of side agreement, I suppose. If there are more things more egregious than paying more for a long coveted card because the price has been driven up by greedy, unfair means, then I can't think of it at the moment.

[swarmee]

Not every time has Brent said that his bidding patterns were irregular but honest. He has agreed that there have been instances of shill bidding revealed to him and he has cancelled them and claimed that he blocked the consignor/bidder from making any additional bids in his auctions.

[Brian Van Horn]

Originally Posted by swarmee

Not every time has Brent said that his bidding patterns were irregular but honest. He has agreed that there have been instances of shill bidding revealed to him and he has cancelled them and claimed that he blocked the consignor/bidder from making any additional bids in his auctions.

If the shill bidding is going on with Brent's auctions, then it is a highly risky procedure. It would also not be the brightest move in the world. Mastro and its spinoff Legendary were caught. Doing it on eBay, although traffic may help to hide the procedure, any entity that would be investigating the behavior would be able to see patterns of behavior and would be able to build a case from that end. The harder part would be linking actions on PWCC's end to the alleged shill bidding. If that happens, then........

[jhs5120]

Is there any industry other than sports memorabilia that frowns upon shill bidding? I have witnessed hundreds of auctions that openly are shilled by the auctioneer (up to a hidden reserve) to garner interest and favorable outcome to the seller. It seems like sports collectors have turned a bogey man out of an otherwise unanimously accepted positive influence on auction house experiences. Just my two cents.

[frankbmd]

Originally Posted by ullmandds

In light of constant talks of shill bidding in the hobby...in addition to me being sick and laid up at home...I've been giving the cincept of "shill bidding" more thought.

Shilling is rampant and in many cases allowed in the auction world. Whether its antiques, collectibles, art or real estate...shilling seems to be a commonly used strategy to ensure the hammer price ends up close to or above sellers "reserve" so as to avoid a higher % of "no sales" which is bad for everyone.

So why should this hobby be immune? I'm in no way advocating this in any way. I think the key is the "reserve." And the problem is that most of the time the reserve is only known to the actually consigner and sometimes the auctioneer...but not revealed to the public.

And the purpose is obviously to encourage spirited bidding. And how boring would an auction be if every card had a published reserve around the retail value.

I recently won a card from PWCC...and there was what appeared to me to be very suspicious...likely shill bidding. I questioned brent and he agreed the bidding was unusual...but he had seen this type of very small incremental bidding to reveal the winning bid before.

And...he said that he knew for sure the next highest bid was legitimate...sooooo. While I appreciated his time and thought I still was a little buggered thinking as we all do...I could have likely gotten the card cheaper.

But maybe this just isn't realistic in this day and age with information and data everywhere. It seems as of the last 10-15 years many have come onto this board asking what a psa 3 cobb(red)...for example is worth...expecting there to be a "market" price for one as if it were an oz. of gold or something.

And we all know there are many other factors that go into the equation than just grade.

So will shill bidding always be around and might it even propogate further?

Sure seems so...unless auctioneers intervene.

I stumbled upon this scientific analysis of shill bidding and possible ways to combat it. IT's very interesting although I skipped all of the calculus...it made my head spin. Maybe frank can explain it to us.

http://oz.stern.nyu.edu/seminar/fa01/1108.pdf

The paper referenced above is quite limited in scope and addresses only seller shilling, which, with the author's solution, benefits the "auctioneer" greatly. The system described by all the formulae assumes that the auctioneer is "honest" and would not shill to benefit himself. It also fails to address the "new" market value that could occur as the result of a shilled auction and its impact on future auctions. I would not recommend spending too much time trying to understand what the authors are promoting. The real world is more complicated and unfortunately this paper does not address real world issues. Ask Mastro.

[ullmandds]

Thank you for the executive summary Frank! But it is an interesting proposal .