Wednesday, January 25, 2006
Have you ever gone onto ebay and placed a bid on something that you didn't actually want to win? Before you cry out "shill bidding!" let me explain. According to ebay, shill bidding "is bidding that artificially increases an item's price or apparent desirability, or bidding by individuals with a level of access to the seller's item information not available to the general Community." Clearly, based on the second part of the definition, shill bidding is unethical and ebay rightly disallows it. But what about the first part of the definition? What does ebay mean by "artificial"?
Consider the following scenario: a bidder sees an item and bids on it to raise the price of the item, but he does not really want to win it. Yet, the bidder agrees to the fact that his bid is binding and will not retract it, so if he happens to wins the auction, then he will buy the item. In other words, it's a gamble on the part of the bidder.
Why would this ever happen? Well, some people own items that they feel are worth a certain amount of money. When they see those items being sold on ebay at a very low price with very few people bidding on them, they might feel the desire to bid on the item just to raise the price and spur interest, thereby protecting the value of their own item without actually hoping to win it. Keep in mind, in this scenario, the bidder is not associated with the seller at all, and if he wins the item, he knows he is obligated to pay for it and he will. Such a bidder has the following motivations: 1) He increases the value of things that he feels are deserving, and 2) There's the thrill of very possibly winning the auction by accident.
Is this unethical, "artificial", another form of shill bidding? Looking through ebay's policies, I can't find anything that explicitly says it's not allowed. Is there even a term for this type of bidding ("ebay roulette" is the closest I could find)? I imagine that people might do this on auctions for items they themselves want to sell later, so that demand for those items will be kept sufficiently high.
When I mentioned this to a friend, he found the very idea of it to be abhorrent. Is it? Usually, when discussing ethical issues, we talk about who is being harmed. Clearly, the seller is not being harmed in this scenario. The bidder is not harming himself beyond the situation he has willingly placed himself in. Other bidders might be harmed in the sense that they aren't able to get a great bargain anymore, but it's debatable whether or not that was their right to begin with. I think the crux of the issue is whether or not the bidder who doesn't want to win is bidding in good faith. On one hand, he is bidding in good faith, because he will accept the final outcome even if it's not in his favor. He is not in contact with the seller in any special way, and he has no idea what other people are bidding. On the other hand, it is generally understood that people bid in order to win, not just to raise the price of an item. Does this practice violate a basic social contract? Does it undermine the trust necessary to maintain an auction community?
What do you think? Is this practice unethical? Should it be discouraged? Do you have any experience in this matter? If you've done this before or consider yourself a victim and want to share your story, I'd love to hear about it. Feel free to comment anonymously if you want.
Posted by Lawrence Eng at 1:12 PM