ebay finds that PWCC engaged in shill bidding?

[Mark17]

Originally Posted by Peter_Spaeth

That's circular reasoning, no?
And your example is very different from mine and you know it, in mine people are putting in bids hoping they don't win, for the purpose of driving up the price. Classic market manipulation in my opinion. Making bidders think someone else really wants the card at a higher price.

If a card is at auction and a shill bidder bids $120, the message he's sending is that the card is worth $120 to him. He is hoping someone will think it is worth $130, but he is not telling people that.

However, if a dealer lists a card at $130, he is saying that is the price it will take to acquire it from him, implying that is its value.

Originally Posted by Peter_Spaeth

Whether it's OK or not is a different question of course, my only point is under those circumstances I would question whether the final price is manipulated or not.

Shill bidding is not an acceptable tactic. But a shill bidder is hoping to get someone to pay $130 for that card. A dealer revising his ebay listing, jacking their ask price up to $130 is trying to get someone to pay $130 for the card. Either way, if someone is looking at that card and willingly decides he will pay $130 for it, then there you have it.

Examining the motivation of an under bidder in an auction doesn't change the reality that the card voluntarily transacted at $130.

[Peter_Spaeth]

Originally Posted by Mark17

If a card is at auction and a shill bidder bids $120, the message he's sending is that the card is worth $120 to him. He is hoping someone will think it is worth $130, but he is not telling people that.

However, if a dealer lists a card at $130, he is saying that is the price it will take to acquire it from him, implying that is its value.



Shill bidding is not an acceptable tactic. But a shill bidder is hoping to get someone to pay $130 for that card. A dealer revising his ebay listing, jacking their ask price up to $130 is trying to get someone to pay $130 for the card. Either way, if someone is looking at that card and willingly decides he will pay $130 for it, then there you have it.

Examining the motivation of an under bidder in an auction doesn't change the reality that the card voluntarily transacted at $130.

The difference to me is that inflated fixed prices are rampant, people tend to ignore them, whereas in the context of an auction, bidders (rightly or wrongly) assume all bids are made in good faith and not for the purpose of sending a false signal to the market.

So if I saw a BIN of 130 I would probably think oh eff the seller, whereas in an auction if I saw the current bid at 120 I might well think oh the price of this card is going up I guess I should go to 130.

[Mark17]

Originally Posted by Peter_Spaeth

So if I saw a BIN of 130 I would probably think oh eff the seller, whereas in an auction if I saw the current bid at 120 I might well think oh the price of this card is going up I guess I should go to 130.

In that scenario, it sounds like you are manipulating yourself.

Sometimes I buy stuff, sometimes I win stuff at auction. I know what I am willing to pay for something either way, and while I seldom or never have bidders' remorse for spending too much, I frequently win stuff for less than I had decided I would be willing to pay.

Maybe it comes down to fiscal discipline?

[Peter_Spaeth]

Originally Posted by Mark17

In that scenario, it sounds like you are manipulating yourself.

Sometimes I buy stuff, sometimes I win stuff at auction. I know what I am willing to pay for something either way, and while I seldom or never have bidders' remorse for spending too much, I frequently win stuff for less than I had decided I would be willing to pay.

Maybe it comes down to fiscal discipline?

How have I manipulated myself, I don't follow? How am I supposed to know the difference between a card increasing in value with a good faith bid at 120, and a bad faith bid at 120? I'm not omniscient.

[Mark17]

Originally Posted by Peter_Spaeth

How have I manipulated myself, I don't follow? How am I supposed to know the difference between a card increasing in value with a good faith bid at 120, and a bad faith bid at 120? I'm not omniscient.

In your example, you won't pay $130 for a card (eff the dealer, you said) but then you would turn around and spend $130 for the same thing because of your convoluted thought process.

For me, if I would go to $130 in an auction I would pay $130 and get it from the dealer.

[Peter_Spaeth]

Originally Posted by Mark17

In your example, you won't pay $130 for a card (eff the dealer, you said) but then you would turn around and spend $130 for the same thing because of your convoluted thought process.

For me, if I would go to $130 in an auction I would pay $130 and get it from the dealer.

I'm changing my assessment based on real time information, that is the 120 bid which I presume to be in good faith. Before that bid I had a different valuation. This isn't rocket science and my thinking is not convoluted at all.

[Mark17]

Originally Posted by Peter_Spaeth

I'm changing my assessment based on real time information, that is the 120 bid which I presume to be in good faith. This isn't rocket science and my thinking is not convoluted at all.

In your example, the shill bidder is signalling the asset is worth $120. YOU are the one coming up with the $130 price.

It is convoluted to say $130 from a dealer (also a real-time offer) is too high, but the same price for the same item is not.

[Snowman]

I think some of you guys are overstating the impact that shill bidding actually has on the broader market. I hate shill bidders just as much as the next guy, and it obviously costs people more money sometimes, but I disagree with some of the narrative here regarding how much it actually influences market prices overall.

When I determine how much I'm willing to pay for an item, or how much I'm going to sell one for, I base those decisions on how much I predict the next one will sell for, not how much the last one sold for. For high pop count cards, this is pretty simple. I just look at recent sales and throw out any outliers (which I assume most people do). So for a Mike Trout RC, that's not exactly difficult to price. But for something that sells very infrequently, I do more research and I build out regression models and forecasting models that take into account other similar cards. But I'm also a math nerd. But I think most people do something at least somewhat similar that yields directional accuracy even if they lack the necessary skills to build forecasting models. It doesn't take a genius to figure out that if the last 10 sales of the card you want to buy are $100, $105, $97, $108, $110, $94, $27, $102, $101, and $278, that something abnormal happened with the $27 and $278 sales and to discard them as outliers. The $278 was probably shill bid or a fake sale, or someone thought it was a refractor when it wasn't, something like that which makes it an outlier. Some disingenuous sellers might try to point to the $278 saying, "the most recent sale was $278", but people aren't stupid. Any statistical model worth its salt is going to predict the hammer price on the next one to be about $100 +/- $5 or so. The sale that was shill bid up to $278 is going to have almost no effect on the market as a whole. That doesn't mean that all shilling has no effect. Surely it can and does, but for the most part these sales are outliers and people know to discard them.

I think there is a disconnect though regarding the extent to which people think shill bidding occurs and the extent to which it actually occurs, or rather the extent to which it actually affects the outcome of a sale. The vast majority of sales are not affected by shill bidding. Even with the consignment companies like PWCC and Probstein. Sure, there's no shortage of consignors who shill those auctions, but not nearly as often as most people seem to think. I've consigned probably 1,000 cards or so over the past 2 years and I could probably count on one hand the number that had to be relisted for non-payment. Granted, I don't shill my auctions, so it's not a representative sample of the entire consignment market, but it does shed light on how small at least part of the problem is.

I think most people who shill bid on their consignments probably treat it similar to a 'reserve' price because they don't want their card to sell for less than its true market value, which as others have pointed out above, can often happen with auctions. Believe it or not, Probstein sales are flooded with examples of cards that sell well below market (as well as many that sell at or above market). When he has multiple examples of the same card (say 12 Zion Williamson PSA 10 Prizm RCs) he often lists them all to end at the exact same time. This is a terrible selling strategy because it often forces buyers to choose which one they want to try to win rather than giving them a shot at all of them. I remember last year wanting to buy a card that he had 8 of, all ending at the same time. It was a fairly common card with a well-defined market value of around $300 at the time. Knowing I could probably get one below market because he had listed them with this strategy, I decided to place a bid of $250 on all of them in hopes that I might get at least one at a bargain. I ended up winning 6 of the 8 lol. The next week, that same card was back to selling for $300 again.

As far as market impact goes, a shill bid has no market effect unless it succeeds in getting a buyer to pay above market prices for something. If the last 4 sales of a card were for $100, $110, $95 and $105, and the next one receives a $90 shill bid placed on it, it's not going to impact the overall market at all. It just serves as a 'reserve price' on the item. If someone shill bids $150 for it, they will almost always just end up "winning" that auction instead (usually at a market price bid of ~$100-110). Very rarely do they succeed in getting someone to pay $150 for a $100 card. And even if they do, again, the market generally recognizes this sale as the outlier it is and discards it when making future purchasing decisions.

The idea that the entire market is somehow pumped up by these outliers or that even the majority of PWCC sales are artificially inflated simply is not true. Probably over 98% of PWCC/Probstein auctions get paid for. The primary reason PWCC gets higher prices for their cards is because they have more eyes on the listings. It's not because of shill bidding.

[Peter_Spaeth]

Travis, redo your numbers by dollar volume and not sheer number of sales and see what you come up with. Even if your numbers are right, and I doubt it, they’re misleading because the vast majority of cards are relatively inconsequential. It’s the big cards where the shenanigans are.

[Snowman]

Originally Posted by Peter_Spaeth

Travis, redo your numbers by dollar volume and not sheer number of sales and see what you come up with. Even if your numbers are right, and I doubt it, they’re misleading because the vast majority of cards are relatively inconsequential. It’s the big cards where the shenanigans are.

Ya, I agree that shill bidding is more of a problem with higher end collectibles. But if we're discussing the impact of shill bidding on market prices in general, then it's more relevant to look at the effects of widespread shilling activity than it is to focus on a few select auctions where a whale might have gotten fleeced. If you look at the Jordan rookie PSA 10 that sold for 840k as an example, that may have had a huge impact for the parties involved in that one transaction, and perhaps it had a small effect on one or two other sales of PSA 10s, but it didn't affect the broader Jordan market or even the market for that same card in lower grades hardly at all. I was paying attention too, because I have a few mint 86 Fleer Jordans and they didn't go up at all after that sale despite it setting a new record.