Posted By:
Jeff D.To be honest, that reserve policy is very similar to what happens on ebay. I suppose the only difference would be that ebay lets the bidder know that there is a reserve.
But, if you place a bid in an auction on ebay with a reserve, and your bid is above that reserve, ebay automatically bids you up to the reserve price, even if the next highest bidder is way below that price and not near your bid at all. If your proxy bid is still below the reserve, it simply goes to the next bid increment above the current bid as normal (but below the reserve).
It's much more transparent in an ebay auction as you know that you are the only bidder who actually bid above the reserve (by looking at the bid history), but it's the same principle.
The easiest way to avoid problems with this policy is to only bid as much as you really want to pay for an item.
EDIT to add that ebay does not let you know WHAT the reserve price is, only that there EXISTS a reserve.