Irrational e(xu)Bay(rance)
An unusual title and worthy of a little elaboration, methinks.
I was looking for a play on words that would wittily lead into a post on irrational things I’ve seen lately on eBay. There was an Ebay-based pun that jumped out at me, but I’m going to save that for a rant post, should I ever need to write one.
The phrase is a rip-off of irrational exuberance, a throw-away remark once made in the middle of a speech by Alan Greenspan, head of the Federal Reserve. Those two little words illustrated the influence that the world’s foremost economist possessed; no sooner had he said them, the stock market slumped, financial-sector workers latching onto them and taking heed of his warning and causing a slowdown in what had been a booming economy. Whoops.
Well, I’ve been privy to some irrational behaviour on eBay lately. The tie-in with economics writes itself too, since it’s clearly boom behaviour.
Let’s consider an out-of-print book. It’s for a niche audience who are willing to pay a fair bit for a copy. In this case, it’s a book called “The Sharpe Companion”, and the used copies on Amazon start at £25.74 for the hardback version and a whopping £25 (rising to £297.87!) for the paperback, plus the £2.75 default postage charge.
Here’s a screen-capture for reference’s sake:
I periodically look for this book on eBay: At some point, I’ll need it to complete my Sharpe collection, but I’ll be damned if I spend that much money on it. I hope to pick up a bargain, keeping my fingers crossed that I find a copy for under a fiver.
About a week ago, I had another casual look. There were two hardback copies up for auction, identical in all ways according to the descriptions and photos on show. I’m a crafty person and leave bidding to the last few minutes, in the hope that I can pip someone at the post.
Well, I didn’t even bother bidding on the first copy. There had been a last-minute flurry of nine bids, which saw it sell at £21.02 plus whatever the postage cost was. Too much for me.
That makes sense. If competition among sellers on Amazon means that the lower end of the price range is £25, I would expect people to bid to just under that, but not be too far away. (If wilingness to pay only went as far as £10, the Amazon sellers would have incrimentally dropped to that at some point, rather than keep their prices so high that the stock never sells.) Nothing irrational so far.
However … there’s still the other book to consider. This one still had a couple of days to run, yet no-one had made a bid on it. I can’t understand why people bidding £16 and £20 on one didn’t bid even £0.99 on the second one, identical in every way.
So I kept my eye on it. With two minutes to go, I placed the first bid for £0.99. With a mere 37 seconds to go, I upped my maximum bid, just in case someone tried to pip me at the post, bringing the total number of bids to two. I won the item, it costing me one twentieth the price that the other chap had to pay.
Look at that again: There were two identical goods. People were bidding huge quantities for one, irrationally bidding up the price, whilst the other was left untouched. I can’t get my head around that.
I’ve seen this happen before, and I’ve nearly been a victim. I bought a copy of a book on Amazon for one penny plus postage. As soon as it arrived, I happened to notice a bidding war for a copy taking place on eBay, the book eventually selling for £26, the runner-up having bid over £25. Much as I liked the idea of having a rare book in my collection, I didn’t like it enough to give up £20 of money to keep it, so I put it up for auction that day, figuring that the runner-up (and the several others who bid over £20) would want it and make their bids again.
You know what happened? Over the week I had it up, only one person made a bid. £0.99. I valued it a lot more than that and, in the event, was a bit cheeky: I got my brother to make a bid of £16, hoping that that would kickstart a war. I was lucky: The person who had bid earlier wanted it enough to have put in a maximum that exceeded £16, so I got £16.21 for it in the end.
But how silly is that? Why on earth would you bid so much money for something but not think to see whether the same item was going for less? The sellers miss out because of the irrationality. I didn’t get my £20+ that I had every reason to expect and had to pull an ethically dubious stunt to up the bid. (I can justify that in economic terms: I’m not only the seller, but a bidder who valued the item enough to pay up to £16 (in foregone income) to keep it. The chap who bought it in the end lost potential surplus (equal to £16.21 - £0.99), but I still charged him what he was willing to pay to have the book.)
I can only imagine the frustration of the chap I bought from. He’d have had to see the Amazon prices of £25+, see other copies selling for similar (at the same time too!) on eBay, and then had the misery to discover that people are irrational, those bidding on the first copy not being willing to place a twentieth of that on his.
There’s another bidder who experience something similar, having to sell eleven books from the Sharpe series for £0.99, when other sellers hit about twenty times that for the same thing.
In his case though, the fault lies with him. He was irrational enough to have read these books but not know the author’s name. People looking for books with the search item “Sharpe” turn up hundreds of hits, many of which are the names of other authors and nothing to do with what they’re pursuing. If you’re smart, you add something else, such as “Sharpe’s” (seeing as all the books in the series have that in the title but you’re unlikely to find it in other books’ names) or the name of the author, Bernard Cornwell.
This chap though, in spite of having to have read the word many times, got it wrong. His search term was “Bernard Cornwall”, as in the name of the region of England. It cost him: He had to part with all of those books for a pound, and I can imagine he doesn’t know why.
And just in case people think that this is all a little too convenient for a blog entry, here’s a screen capture from my eBay account showing all three items that I’d been looking at.
If you take any lesson from this post it should be the following: When there’s a bidding war on something that you’d like, do yourself a favour and see whether an identical version is going cheaper. There are enough people who are irrationally e(xu)Bay(rant) that this could well be the case, and you pick up for a quid what would’ve cost you twenty sterling without the search.
Tags: Amazon, eBay, Irrational Behaviour