Posted By:
Joe D.first let me say - you da man!
In this one sentence:
"Reducing consignor's premiums and raising buyer's premiums is really just a shell game."
you expressed what I tried to say in a whole bunch of sentences.
I love brevity - so bravo!
I do have some more considerations that I think must be added to your 'math is pretty easy' post (again, great post):
What complicates the math further than the example you show is:
1) the bidding increments
2) the allure or psychology of 'just a little more'
If a bidder is faced with a 10% increment and 20% buyers premium - they may just say fugggedaboutit at an early level. Now 10% increment and 10% premium - they may just say "I'll throw in another bid". If that person is an underbidder (and destined to be an underbidder) - the winner will pay two bids more than where it would have ended.
As far as the psychology behind the decision to bid.... I am thinking if a bidder feels less of a jump in $$$ (instead of 10% increment plus 20% BP) - he will be more apt to bid 'just a little more'.