On Wednesday, June 26, 2002 1:36 AM, Ian Johnston wrote:

> After several hours of bidding, and close watching and active bidding
> towards the official closing time - which moved by many 10 minute
> intervals - there is the potential for long drawn out bidding process.

It's possible, of course, but that wasn't my experience (see below).

> Tactically, aggressive bidding can eliminate competitors and shorten
> the auction time.  However, that may prove expensive.

Let's think about tactics (or should it be strategy?) for a minute.

(1)    The lowest bid must be $100.  There is no maximum.
(2)    Increments are in multiples of $10 with a minimum of $10.
(3)    GST is added on settlement to the winning bid.
(4)    The auction is not moderated by an auctioneer.
(5)    There is no reserve.
(6)    Only a selected few can participate.
(7)    The bidders are anonymous & nobody knows how many are lurking.
(8)    Nobody has any idea of the price (just what they themselves would pay).

The strategy is, of course, not to pay more than you need.  That means reading
the other person's mind.  Hard :)

Contrast that to a house auction.  Everybody has some idea what the house is
worth.  There is an auctioneer to help the bidding.  And there is a reserve.

Let's say a detached house worth about $400,000.  The first bidder might say
$200,000 (or half what might be expected).  The bids go up by a thousand at a
time.  The auctioneer asks for $5,000 increments.  Everyone obliges.  Sooner
or later people start to drop out and the size of the increments decreases.
Eventually the price hits the reserve and the auctioneer consults the seller.

Now with generics.  Let's say I decided that $18,000 was my maximum and you
don't know that.  But I don't know what you would be prepared to bid.  If I
say $10,000 then I might get it with no opposition.  But maybe I could have
got it for $5,000 !!!

So I want to go slowly.  Say $100 at a time.  So I go $100, you go $200, I go
$300 etc.  By the time we get to $2,000 (in $100 increments) I will get fed up
and go $2,500.  My potential loss is $400 because you might have dropped out
if I bid $2,100 instead of $2,500.

But I might wear that as you might have gone to $2,400.  My loss would then
only be $100 (which it would be anyway).  So let's say average loss is half
the increment.

But on the other hand, if I was prepared to pay $18,000, I would still be
happy that I got the domain name at $2,500.  I've saved a bundle and not
wasted time.

So I go $2,500 and you go $3,000.  Then I go $3,500 and you go $4,000.  One or
other of us will think about bumping up the increment to $1,000.  So I go
$5,000 but you stick to $500 increments and go $5,500.  What will I do next?

An alternative plan, which is what I did, occurs if one person is taking big
increments.  You go $1,000, I beat you by the minimum increment of $10 at
$1,010.  Why?  because I have plenty of time.  You then go $2,000 and I go
$2,010.  You go $3,00 and I go $3,010.  That way I'm minimising my loss.  And
your increments must get bigger.  You go $5,000 and I go $5,010.  You never
know where I will stop !!

Another tactic is to delay the bid to the very last second and hope the other
person gets busy during the last ten minutes.  Or misreads the clock.  Or
forgets to refresh the webpage.  There are some dumb people out there.
Putting in a bid at the last second carries its own dangers say if you lose
your conection etc.

One person decided that their maximum bid would be $1,000 and started at that.
When I bid $1,010 they folded immediately.  That's not a good strategy, imo,
because if there was no other bid, they would have wasted $900.

Hope this helps :)

Disclaimer:  The information I have provided is as an auction participant and
not as a Board member.  Whilst every care has been taken, I take absolutely
no responsibility for any person who suffers loss in reliance on this
information.

For an official response you should follow the instructions on the Stuff
website or ask Chris Disspain at <ceo&#167;auda.org.au>

Best regards
Patrick Corliss
_________________________________________________________
I'm on the Board of auDA (the .au country code).  Anything I write is my
personal opinion and does not necessarily reflect the views of any body
with which I am associated.  Please also note IANAL (I Am Not A Lawyer).