Posted By:
Corey R. ShanusRichard,
Sorry for the tardiness of this reply but only now have I seen the most recent posts.
Yes. You're quite correct in that what an item sells for is a function of what a seller is willing to sell it for (supply) and what a buyer is willing to pay (demand). But here's my issue. What buyers are willing to pay (the demand curve) is affected by human impulse, which can be materially impacted by erroneous information (e.g., book bids intended to give the impression that there is real interest at those levels when in fact there is not). Here's an analogy. I want to sell my rare baseball card. A buyer offers me $500, not believing the card to be as rare as I claim. I then make up some lie to persuade the buyer the card is rarer than in fact it is. The buyer, believing me, then raises his offer to $800. Is that ethical? In my book, no. I've just induced the buyer to offer more for the item based on a lie. In my view that is precisely the situation with book bidding. In basest terms, book bids are lies by the auction house whose sole purpose is to persuade buyers there is more interest in an item than in fact there is, thereby inducing buyers to value the item higher than they otherwise would.