In a world in which all men were rational, the premiums are irrelevant.
However, we do not live in a world in which people behave with much semblance of rationality. Having the premium structure is more work for the auction house, not less. It requires disclosures everywhere, complicates billing, adds additional steps and line items in numerous points of interaction and in catalogs, toolkits and in almost everything else they use and produce. Yet every one of them has it. Why? Because the trick works. If it didn't work, the needless complication would be removed and the fees baked direct into the bid price. Many people clearly bid without fully calculating the premium, and even if they do it's easier to dismiss as the 'cost of doing business', just like how many people are well aware of sales tax but don't factor that into the 'is item X worth Y dollars to me?' equation when making a purchasing decision. Relying on this kind of thinking, or the sheer stupidity of users depending on perspective, works. The number of people who end up paying more in this system clearly is greater than the number of people that just don't bid because they see the trick and it bothers them.
Last edited by G1911; 02-21-2023 at 01:35 PM.
Reason: changed a "rationally" to "rationality", because I am stupid and used the wrong formatting originally.
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02-21-2023, 01:35 PM
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