The Leon Luckey Type Card Collection – Bidding Ends on Thursday - August 13, 2015

[iowadoc77]

Originally Posted by T206Collector

It's called anchoring, and I suggest all auction bidders read up on it. It's really interesting. From Wikipedia:

"Anchoring or focalism is a cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered (the "anchor") when making decisions. During decision making, anchoring occurs when individuals use an initial piece of information to make subsequent judgments. Once an anchor is set, other judgments are made by adjusting away from that anchor, and there is a bias toward interpreting other information around the anchor. For example, the initial price offered for a used car sets the standard for the rest of the negotiations, so that prices lower than the initial price seem more reasonable even if they are still higher than what the car is really worth."

Auction houses do the same thing by hiding the BP away from the bid price. The bid price is the "anchor." The BP is irrationally adjusted away. And then the AH immediately flips their numbers to include the BP when they're promoting how big their sales are. It's so obvious why they do that I frankly find it "absurd" that you think all customers treat a straight combined bid/BP number (ebay format) the same as one which hides the ball/BP in their Auction Rules page. Auctions are impulse buy markets, where people are not making the most rationale buying decisions to begin with. It only takes one irrationale participant to drive a price up.

If you make people do multiplication in their heads in a 20-minute extended bidding period at 2am, you will get irrational behavior. That's why you see 19.5% BPs instead of 20%. It makes it less palatable to do the actual math. Quick -- what's 1.195 x $1,900? Most bidders know their number will bring them over $2,000, but some won't realize or care that it's $2,270.50 until they get the invoice. Others will do the 20% calculation in their heads to get to $2,280 and then take an irrational discount in their heads to account for the 0.5% discount, which "saved" them all of $9.50 on a $2,000+ purchase.

Again, it's a form of anchoring, which is a very common way to set prices. E.g., $19.99 seems like way less than $20 to most in TV ads.

Amen to the irrational behavior at 2am! I am a numbers in my head guy and when bidding, i always do the 20% math mental add-on. I must confess, however, that I have also been guilty of buying the same card twice in an auction unintentionally due to the above-mentioned sheer exhaustion at 2am. Auctions bring out irrational behavior in collectors. They just do. I have tried to figure it otherwise, but they just do. Very interesting thread. Thanks to all who have contributed.

[Peter_Spaeth]

Auctions would bring out the same irrational behavior at 2AM whether the premium was explicitly calculated in or not. Heritage does the math for you, but I don't see their prices hurting. According to Paul's Wikipedia psychology they should be doing worse than AH's that allegedly "hide" the premium.

And Bob you can try to personalize this to me but it isn't me at all, it's the overwhelming majority of people who understand this very simple concept.

[Gradedcardman]

Originally Posted by Peter_Spaeth

Auctions would bring out the same irrational behavior at 2AM whether the premium was explicitly calculated in or not. Heritage does the math for you, but I don't see their prices hurting. According to Paul's Wikipedia psychology they should be doing worse than AH's that allegedly "hide" the premium.

And Bob you can try to personalize this to me but it isn't me at all, it's the overwhelming majority of people who understand the very simple concept.

I bid a lot in the AH's. The BP is listed in the auction summary. I do the math and I bid if it makes sense. 10%, 15% or 20%, Its simple math.

[iowadoc77]

Originally Posted by Gradedcardman

I bid a lot in the AH's. The BP is listed in the auction summary. I do the math and I bid if it makes sense. 10%, 15% or 20%, Its simple math.

It is simple math. It is clearly spelled out. Take it or leave it, it is there and it is not going away. If it is too big of a deal, cards need to be purchased elsewhere. Pretty simple really

[Econteachert205]

I agree that at a major sports auction with high end items and sophisticated collectors the prices will equal out no matter the buyers premium. I am not a high end collector and was giving my opinion based on the lower end perspective.


I was also speaking to auctions attended in person, not online where the Bp is factored for you.

[Sean]

Originally Posted by Gradedcardman

I bid a lot in the AH's. The BP is listed in the auction summary. I do the math and I bid if it makes sense. 10%, 15% or 20%, Its simple math.

+1

Of the four most valuable cards that I own,three of them were bought from AHs. And I always knew how much I was bidding with the BP.

[T206Collector]

Whether all, some, or most collectors choose to include the BP in their bidding activities, the auction houses that separate the BP from the bid are trying to anchor the bids at a lower value than what is being spent so as to encourage additional bidding. It is a ploy. Whether it works or not is in the eye of the beholder.

[Peter_Spaeth]

Originally Posted by T206Collector

Whether all, some, or most collectors choose to include the BP in their bidding activities, the auction houses that separate the BP from the bid are trying to anchor the bids at a lower value than what is being spent so as to encourage additional bidding. It is a ploy. Whether it works or not is in the eye of the beholder.

And your evidence for this is?? Your say-so? And if you are accusing auction houses of attempted deception, why don't you name the ones you think are guilty?

[nolemmings]

I don't have any problem following the logic of his argument Peter, with or without empirical data to back it up. Again, if the BP has no influence on final price or bidder's behavior, why is it that no auction house, as in none, does away with it and take its cut from the seller/consignor? Consignors really should have no rational problem with that if their bottom line is the same right?

[T206Collector]

Originally Posted by Peter_Spaeth

And your evidence for this is?? Your say-so? And if you are accusing auction houses of attempted deception, why don't you name the ones you think are guilty?

Seriously? Well, okay. Here's some basic research and empirical data on the topic:

"Morwitz et al. (1988) found that auction bidders agreed to pay more in total cost in an auction when a 15 percent buyer's premium was charged separately than in one in which there was no buyer's premium. The anchoring effect observed in partitioned pricing has subsequently been replicated and extended in several studies (e.g., Bertini and Wathiey, 2008; Chakravarti et al., 2002)" For complete citations, click here:

https://books.google.com/books?id=22...horing&f=false

[begsu1013]

Originally Posted by Peter_Spaeth

And Bob you can try to personalize this to me but it isn't me at all, it's the overwhelming majority of people who understand this very simple concept.

yep.