New lawsuit accuses PWCC of massive shill bidding

[Peter_Spaeth]

Originally Posted by ullmandds

I think ed's point is that the ultimate high bidder was "willing" to pay a higher price therefore it should not be "" inflated. I disagree with this sentiment.

Right. Where the price of a stock is inflated because the issuer withheld material information, people are still "willing" to pay the inflated price, but that does not negate fraud. It is a non sequitur IMO.

[dbussell12]

Originally Posted by Peter_Spaeth

Right. Where the price of a stock is inflated because the issuer withheld material information, people are still "willing" to pay the inflated price, but that does not negate fraud. It is a non sequitur IMO.

again, correct. market manipulation is an objective fact. non-correlative with the subjective decision by any individual buyer to participate in said market after the fact. entirely different discussion

[edhans]

My main point is that a willing buyer and a willing seller should be sufficient to establish a "market value". We shouldn't require validation in the form of a third party underbidder. I don't think the presence of shill bids creates imperfect information. That is, it doesn't change what the buyer is willing to pay. On the flip side, we may conclude that some values presented in price trackers are deflated, since the buyer may have gone even higher, but didn't need to since there was no underbidder.

I do hope everyone understands that I do not condoning shill bidding. Just pointing out that its effect on "market value" may be somewhat overstated.

[jayshum]

Originally Posted by edhans

My main point is that a willing buyer and a willing seller should be sufficient to establish a "market value". We shouldn't require validation in the form of a third party underbidder. I don't think the presence of shill bids creates imperfect information. That is, it doesn't change what the buyer is willing to pay. On the flip side, we may conclude that some values presented in price trackers are deflated, since the buyer may have gone even higher, but didn't need to since there was no underbidder.

I do hope everyone understands that I do not condoning shill bidding. Just pointing out that its effect on "market value" may be somewhat overstated.

But if the sale isn't real because the high bidder was a shill bidder, then the reported values are inflated because no real buyer was willing to pay that much.

[edhans]

Originally Posted by jayshum

But if the sale isn't real because the high bidder was a shill bidder, then the reported values are inflated because no real buyer was willing to pay that much.

Yes, as I stated above.

[dbussell12]

Originally Posted by edhans

My main point is that a willing buyer and a willing seller should be sufficient to establish a "market value". We shouldn't require validation in the form of a third party underbidder. I don't think the presence of shill bids creates imperfect information. That is, it doesn't change what the buyer is willing to pay. On the flip side, we may conclude that some values presented in price trackers are deflated, since the buyer may have gone even higher, but didn't need to since there was no underbidder.

I do hope everyone understands that I do not condoning shill bidding. Just pointing out that its effect on "market value" may be somewhat overstated.

what constitutes a 'willing buyer' is determined by the information the buyer has at hand to inform their decision making. a buyer can only be 'willing' with accurate and adequate information to establish what they are buying and why they are paying what they are paying to purchase said item/service. they may be willing to ultimately sell the farm for any given item. but that is case by case. it isn't a market informed decision. you see this kind of methodology in drug users and addicts, which is why studying drug markets gives you insight into the instability and fallibility of markets as a whole. they are determined by human behavior.

what a buyer is willing to pay typically (unless the buyer is uneducated or functioning a vacuum of their own imagined world) has a direct relationship with established market precedents -- ie, comparative analysis of the marketplace one is operating in. some buyers may be willing to pay far more or far less depending on their real life circumstances for any given item or service. this is exceptional market behavior. these tend to be outliers. ie someone who is willing to pay 5m$ for a carton of eggs.

market value is contextual. buyer and seller don't operate in a vacuum. both use the market environment itself to contextualize their relationship; my willingness to sell you an item and your willingness to purchase said item for any given price point and where we meet is the market environment itself, as you are observing at the ground level. but a market itself is that single relationship times 10000x.

its a logical fallacy to assume that a willing buyer and a willing seller don't take place within said context -- because all transactions occur and are weighed (again, unless buyer and or seller are uneducated, such as paying 30m$ for a penny sleeve) to be reasonable or unreasonable therein. if we were on mars and you were the only person i could buy or sell any given item from, you would determine the market value and i would either have to accede, or move on. a market is the constituent buyers and sellers of a house, a card, what have you. supply and demand is contextual unless i need your item to survive and i have no where else to acquire it from.

i may be willing to pay 10$m for your item, but if i can go down the street and get it for $5 from five other people, i'm likely not going to be willing to pay you 10$m. if you remove those other five people from the market or offer them a false sum which makes them believe their item is worth 10$m because you offered them 10$m for it and they change their prices, then i have to be willing to pay 10$m due to the inflationary imagination of the market (false buyer[s]) or else move on.

i hope this makes sense. any individual buyer may well be willing to ultimately pay 30m$ for said penny sleeve; that is their prerogative. if you create, whether by imagination or shill bidding or otherwise, an environment where fifty million buyers are willing to pay 30m$ for a penny sleeve, you've really captured peoples' imaginations...

[Peter_Spaeth]

Ed, suppose after the conclusion of an auction all max bids became known. Are those a better indicator of "market value" than the actual sale price? After all, they reflect what someone was "willing" to pay?

[Exhibitman]

Originally Posted by raulus

Fair enough. Maybe to clarify, I get the general theory. I just don’t get the fiction where you ignore that you had a choice to bid at that price and proceeded of your own volition.

Setting aside the fact that undisclosed shill bidding is illegal in OR where PWCC operated, we can argue about the margins of what is tolerable on the spectrum between the auctioneer driving up the bid using 'house' accounts and inside information about the actual bidders' maximums (Mastro) and a consignor having a friend bid to a specific level w/o the auctioneer's participation and if there is an actual risk of having to 'buy' the card from the auctioneer (i.e., pay for it and take delivery).

My view is that if you want to have a reserve auction, have one. If you want to set a floor on a card, set it. But don't claim to sell in an absolute auction and then engage in or tolerate shilling to put a floor under the item. Just doesn't smell right to me. Again, legalities aside.

As for comps, I agree with Leon when it comes to rare items. There are no comps, so fighting over the price is silly because I am not going to negotiate over it. Modern cards are so commoditized that comps are ubiquitous. I have four apps available on my phone plus eBay to check prices. All I hear at shows from modern card shoppers is “Card Ladder this” and “Wax Stat that”, and at the last show I attended every table had at least a customer or two furiously fingering something at his crotch (oh, get your minds out of the gutter; I mean their phones, checking comps).

[lumberjack]

Al Taubmann, a guy who owned a lot of America, went to prison after Christie's was found guilty of fixing prices.

I was among a number of individuals who received checks for being the javlin catchers in a Christie's East sports auction. I'm speaking of the BB Mag photo auction. It wasn't much money in case you are wondering.

Bill Mastro and the lads at Mastro's AH went to jail as well. Shill bidding. Nobody got compensated for their fraud, which went on for years.

John Rogers scammed EVERYBODY. He owed millions. Maybe the idiots at the banks who were snowed by his con got a small percentage of their loans back. I doubt if any memorabilia people received ten cents.

All this shill bidding and foolishness, which could make you think, "Hey things aren't what they seem,"....And the prices have never come down.

[raulus]

Originally Posted by Exhibitman

Setting aside the fact that undisclosed shill bidding is illegal in OR where PWCC operated, we can argue about the margins of what is tolerable on the spectrum between the auctioneer driving up the bid using 'house' accounts and inside information about the actual bidders' maximums (Mastro) and a consignor having a friend bid to a specific level w/o the auctioneer's participation and if there is an actual risk of having to 'buy' the card from the auctioneer (i.e., pay for it and take delivery).

My view is that if you want to have a reserve auction, have one. If you want to set a floor on a card, set it. But don't claim to sell in an absolute auction and then engage in or tolerate shilling to put a floor under the item. Just doesn't smell right to me. Again, legalities aside.

As for comps, I agree with Leon when it comes to rare items. There are no comps, so fighting over the price is silly because I am not going to negotiate over it. Modern cards are so commoditized that comps are ubiquitous. I have four apps available on my phone plus eBay to check prices. All I hear at shows from modern card shoppers is “Card Ladder this” and “Wax Stat that”, and at the last show I attended every table had at least a customer or two furiously fingering something at his crotch (oh, get your minds out of the gutter; I mean their phones, checking comps).

I get the argument that if my specific item is shilled such that it drives up the amount I pay, then I’ve been screwed and have damages.

What I’m less convinced about is the generally inflated market has caused me damages that I should be able to collect. As an analogy, just because some people are willing to pay $20 for a dozen eggs at Whole Paycheck doesn’t mean that I have damages because I pay $5 per dozen for mine at the regular Joe grocery store, even though the price for my eggs was influenced by the fact that some people pay a whole lot more for their eggs at Whole Paycheck.

[edhans]

Originally Posted by Peter_Spaeth

Ed, suppose after the conclusion of an auction all max bids became known. Are those a better indicator of "market value" than the actual sale price? After all, they reflect what someone was "willing" to pay?

Interesting concept. That maximum bid does reflect what the buyer would be willing to pay. Very little different than if he saw it on a dealer's table or on a website. So, in most cases, it would be a truer indicator of market value. Observe the important concept-there is no need for a third party (the underbidder). An arms length transaction between a buyer and a seller should be sufficient to establish a market value.

[dbussell12]

ed -- not to intrude here, but i don't think you are totally understanding the concepts you're using. market value and a single buyer's maximum bid or what a single buyer is willing to pay are not the same thing. a market is an ecosystem. a single buyer is a subjective, individual participant in said market environment.

just because one single buyer is willing to pay a certain amount for an item/good/service, it does not mean nor constitute 'market value'. market value is a sum, collective stabilization of value across multiple transactions/the landscape of the market itself.

you're thinking on a case by case basis. market value is the sum of case by case bases. no market works in a silo of single buyers. a single transaction between a buyer and a vendor constitutes a single record of a transaction within that market ecosystem, but it by no means establishes or even constitutes the concept of 'market value' itself but even as a sliver and incredibly small fragment of the entire tapestry of how markets move and how valuation is constituted en masse. a transaction value constituted has to be repeatable, not anomalous; again, a buyer's willingness to pay any given sum has to be proven standard by and to market motivations as a whole, not motivated by outlier motivations and personal/subjective factors of individual valuation of said product/service's perceived true worth.