Quote:
Originally Posted by benjulmag
FWIW, the fact that the major auction houses (e.g., Sothebys, Christies, etc.) across all fields of collecting employ the method of hidden reserves with the house being allowed to secretly bid up to the reserve, suggests to me this method works in achieving the highest prices. That it might piss off some bidders who will therefore not bid is more than offset by the higher prices it generates among those bidders who participate. Conceptually it makes sense it would work, as it reduces the number of bidders required to achieve the desired price from two to one. In regard to the demand curve, for the most desirable items it is very inelastic. Because of that, bidders who really want the item will knowingly choose to take the bait and bid, fearing that, even though unlikely, if there is that "real" second bidder, they will have no chance of buying the item after the auction.
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You are undoubtedly correct in all of this, because for most collectors, "stuff trumps everything." I would point out that lots of other morally questionable business practices are also quite successful for the sellers, and from time to time laws are enacted to stop them. Endless discussions here have addressed which cross the line in our hobby and and which don't, with much outrage expressed regarding the former. For me, as I said, any selling strategy that involves keeping bidders in the dark does cross that line. The fact that most AHs employ those strategies and buyers continue to patronize them doesn't change my opinion in the least.