Huggins and Scott Auction bid increments good for buyers, bad for consigners

[darwinbulldog]

Originally Posted by JustinD

Any reasonable logic in my mind says +1 on this.

The smaller increments encourages additional bids due to every piece of marketing knowledge since the beginning of written time. Under no premise can I believe that the current bid price would be that much higher at this second with a higher percentage. People pay what it is worth to them, no one without a possible diagnosis of a mental disorder has an obligation to bid more money just to satiate an obsession to bid. I would say that you are completely eliminating more bidders with an obscene bid jump from the pool prior to extended bidding far more than improving end value for consigned items.

I wouldn't go as far as "under no premise" but certainly that's the case as a general rule. Still, I suspect there are plenty of collectors who might have some formula for calculating what they're willing to bid (based on prior sales and adjusting for buyer's premium, sales tax, shipping charges or whatever) then calculate that they're willing to bid up to, say, $594 for the card. And among those people are surely some who would bid $575 but not $600 if both options were available but who absolutely would have bid $600 if it was the first increment available after $550. On balance though, sure, smaller increments lead to slightly higher sale prices.

[JustinD]

Originally Posted by darwinbulldog

I wouldn't go as far as "under no premise" but certainly that's the case as a general rule. Still, I suspect there are plenty of collectors who might have some formula for calculating what they're willing to bid (based on prior sales and adjusting for buyer's premium, sales tax, shipping charges or whatever) then calculate that they're willing to bid up to, say, $594 for the card. And among those people are surely some who would bid $575 but not $600 if both options were available but who absolutely would have bid $600 if it was the first increment available after $550. On balance though, sure, smaller increments lead to slightly higher sale prices.

Hey Glenn!

I think I would stick with the "under no premise" based on the statements second half of "at this second". I agree, most folks have a set budget and the OPs math is sound, but it's leaving out the all important psychology.

I think the more people you don't scare off prior to extended bidding, the higher chance you have of the psychology changing to the auction house's advantage. Those late night bidding wars are simply people getting caught in the excitement and lowering defenses. With days on the timer, that excitement is replaced with logic. This leaves out prospective bidders from extended bidding and lowers the chances of additional back and forth to extend time.

Opinion based on my observations and trying to use my psychology college work that I never use in my real job, lol.

[BobC]

Originally Posted by JustinD

Hey Glenn!

I think I would stick with the "under no premise" based on the statements second half of "at this second". I agree, most folks have a set budget and the OPs math is sound, but it's leaving out the all important psychology.

I think the more people you don't scare off prior to extended bidding, the higher chance you have of the psychology changing to the auction house's advantage. Those late night bidding wars are simply people getting caught in the excitement and lowering defenses. With days on the timer, that excitement is replaced with logic. This leaves out prospective bidders from extended bidding and lowers the chances of additional back and forth to extend time.

Opinion based on my observations and trying to use my psychology college work that I never use in my real job, lol.

Justin,

That is a great point. In the other thread about this topic, in the post-war forum, I even said that if AHs were really smart they should actually think about decreasing the bid increments the farther along they got into the extended bidding period. As you stated, psychology can play a huge part in bidding. It is a heck of a lot easier for a bidder to rationalize going an extra $10-$25 on something they already bid $500 on than it is to suddenly go say another $100. People bidding want to win, and rationalizing going an extra bid or two isn't that hard when the increment is seen as small compared to the overall bid.

Plus, anybody ever go to a real live auction and not see the auctioneer throw the bid increments out the window as the bidding was coming to an end? They aren't stupid, so why don't these AHs find someone to tweak the software to have a similar effect? Shouldn't be that difficult, yet no genius has thought of doing it yet. Heck there's even sign language for that. A live auctioneer has something at $600 and he/she's asking for $700, you make a motion with your hand like you're slashing your throat, and almost universally the auctioneer will give you the lead at $650. Or does nobody do that anymore and you have to be an old fart like me to even know what I'm talking about?

[whiteymet]

Originally Posted by BobC

Justin,

That is a great point. In the other thread about this topic, in the post-war forum, I even said that if AHs were really smart they should actually think about decreasing the bid increments the farther along they got into the extended bidding period. As you stated, psychology can play a huge part in bidding. It is a heck of a lot easier for a bidder to rationalize going an extra $10-$25 on something they already bid $500 on than it is to suddenly go say another $100. People bidding want to win, and rationalizing going an extra bid or two isn't that hard when the increment is seen as small compared to the overall bid.

Plus, anybody ever go to a real live auction and not see the auctioneer throw the bid increments out the window as the bidding was coming to an end? They aren't stupid, so why don't these AHs find someone to tweak the software to have a similar effect? Shouldn't be that difficult, yet no genius has thought of doing it yet. Heck there's even sign language for that. A live auctioneer has something at $600 and he/she's asking for $700, you make a motion with your hand like you're slashing your throat, and almost universally the auctioneer will give you the lead at $650. Or does nobody do that anymore and you have to be an old fart like me to even know what I'm talking about?

Bob:

There is at least one AH (Clean Sweep) that does basically the exact opposite of what you suggest. That AH has the 10% increments that the OP has suggested would be better for the consignor. But as the auction goes into extended bidding their policy is to add an additional 5% to the buyers premium for bids received after 1:30 AM and an additional 10% after 2;30 AM.

What is everyone's take on that policy?

[BobC]

Originally Posted by whiteymet

Bob:

There is at least one AH (Clean Sweep) that does basically the exact opposite of what you suggest. That AH has the 10% increments that the OP has suggested would be better for the consignor. But as the auction goes into extended bidding their policy is to add an additional 5% to the buyers premium for bids received after 1:30 AM and an additional 10% after 2;30 AM.

What is everyone's take on that policy?

Fred,

I forgot about them doing that. But think about it, say you've been after a particular lot in one of their auctions all night, going head-to head with another just as determined bidder. It's late, you're tired, and the other guy just went over your last bid that was just about the top amount you'd pay for the lot. You really like and want the card in that lot and have been working and bidding to get it all night. Now say that last bid topping you was at $500, and it just went past 2:30 AM. Are you more likely to say WTF and throw in another bid if the bid increment was suddenly cut to $25 (5.0%), or go the extra $125 (25.0%) to now cover the higher increment imposed by Clean Sweep?

I think any normal person with half a brain would know the answer to that without thinking. Using Clean Sweep's increasing bid increment philosophy, you probably aren't going to suddenly go 25% over what you thought a lot was worth in one single bid. But if in this case that next bid is only $25, you may just think, hell yeah, I'll go a little bit more and see if the other person drops out. And even if the other bidder comes right back to top you again, so now you drop out to let them win, that lot just went for about 10% more than it would have otherwise if the increased bid increments were in place.

Quite honestly, the increasing bid increment philosophy seems to have more to do with getting the auction to end earlier so the AH employees can go home than it does with trying to always get the most money for the consignors. And assuming the employees are getting paid by the hour, I can understand why an AH might want to curtail how long the auctions run to cut their payroll, but to the potential detriment of some consignors.