Shill Bidding

General
41

Very well said. This could apply to many of the problems with the hobby i.e.: crackers, border painters, pack weighers, etc.

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42

Here comes the trolls. Just ignore him :ninja:

43

This is one of the most real talk posts I’ve ever read in the hobby! So much wisdom.

44

Do you have any substantive response? You seem to be making a moral claim about shill bidding (which requires a justification).

If a legitimate buyer wins an auction on which some else shill bid and, presumably, is satisfied with the price he paid, it’s hard to identify the problem with the shill bidding.

  • Perhaps you believe a shill-bid auction somehow misleads a third-party who sees the sale price? (But even that claim is hard to make, given that the buyer is satisfied with the price he paid–and was willing to and in fact paid it–and so there’s nothing immediately misleading about it in terms of market economics.)

  • Or perhaps you believe shill bidding is, in itself, a dishonest act, i.e., bidding with no intention of paying. (But that rationale would be a moral criticism of only the shill bidder himself.)

Consider a person who bids $100 on an auction and changes his mind immediately afterward. He ultimately loses the auction. But had he won, he wouldn’t have paid. Does your moral argument against shill bidding also cover this behavior?
Again, I’m not saying shill bidding is permissible or good. (And, obviously, it’s against the rules of various auctions. ) I’m simply asking for the opinions of people who claim it is morally wrong to explain why they believe so.

I know SMPratte is willing to think philosophically; he said as much in one of his Youtube videos (which I love–thank you, Scott!) That’s all I’m asking here: a philosophical question on a relevant topic, and nothing to do with trolling. I hope you can recognize that instead of simply insulting me for posing the question.

45

You’re forgetting that the shill bidder is more often than not, the owner of the card

46

Why people believe it’s morally wrong to artificially inflate the price of an auction?

Mate, you are either trolling or have never been ripped off in your life.

You say there’s nothing immediately misleading about it, if the winner was happy to pay.

That’s not true. An auction requires two serious bidders to continue to raise the price. If one of those bidders is only there to raise the value of the item, it’s not showing a true reflection of the market. This has serious implications on the whole market, not just one sale.

I’m not sure why you brought up an example that isn’t relevant to this situation.

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47

Shill bidding is wrong plain and simple. There is no way around it. If you as the seller do not want to risk selling the item below an amount that you are not comfortable with you can ethically avoid that by using that RESERVE MET/ NOT MET feature. That let’s anyone participating in the bidding know if the bidding has reached an acceptable selling price.

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48

You describe shill bidding as artificial inflation. But I’m having trouble seeing how a price that a buyer happily pays is not the market price or is artificial. Isn’t what a buyer happily pays–or at least freely pays–the market price, by definition?

Suppose the following: The shill bidder is the owner of an item for sale. Further suppose that he bids until he would be satisfied with the sale price, and that a buyer then bids and wins the item. If both seller and buyer are thus satisfied with the sale price, where are the “serious [negative] consequences” on the market? (The result, from the perspective of the market, I believe, is nothing but efficient.)

Now, I see quite clearly that shill bidding is (1) misleading to buyers, insofar as they assume it is not happening; and (2) in violation of auction rules. (And I do not recommend or engage in shill bidding.) But I can’t see how shill bidding is anything worse than (1)+(2) or how it is morally reprehensible by virtue of its effect on the market.

49

@lexleo There is always a value discussing ideas. This is why I created the site; to share thoughts, experiences, etc.

However, shill bidding is one sided. Any seller that is bidding on their own auction is the definition of a rigged auction.

Discussing the severity or fair market price is a separate topic.

Also, part of “fair market value” is the “fair”. The sellers who have a reputation of shill bidding are not valid metrics for any valuation, as their listings are unfair auctions.

For example: If a legitimate bidder has a max bid of $100, and the previous highest bid was $50, and the seller shilled it to $99, this is a shilled auction. The fact that it falls under the umbrella of the legitimate buyers max bid is irrelevant. A Fair auction would have ended at $51.

If the argument is that someone would pay $99, then list the card buy it now/make an offer and wait for that offer. This would be a legitimate sale. Any seller making false offers, or false bids on their own listings is inherently creating an unfair and rigged listing.

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50

Thank you, @smpratte!

I see that a shill-bid-driven auction is rigged, and even unfair. But I suppose the question I have is–and it is merely an academic question–whether and how the fact that an auction is rigged or unfair in that way matters to the market.

To the market, it seems irrelevant that a non-winning bidder on an auction had no intention to pay. That factor seems just as arbitrary as, suppose, a non-winning bidder who had an intention to pay but wouldn’t have been able to (say, because his wallet was stolen after he bid).

If–

A (1) knows precisely what he is buying and (2) freely buys it at some price; and B (3) knows precisely what he is selling and (4) freely sells it at that price

–I cannot see how some other fact(s) unbeknownst to one or more of the buyers matter(s) to the market valuation of the item.

That said, shill bidding is dishonest in itself and a violation of the rules, and may well be wrong for those reasons. But I cannot see how it is wrong by virtue of the effect it has on the market:If shill bidding were to lead to a market valuation that was unfair in the relevant sense, the buyer wouldn’t buy at the shill-bid price, right?

51

I can’t actually believe you are trying to spin this in anything other than a negative light. Smh.

Is the market value of something (regardless if it is fair or not) accurate if there is influence in the price that is both illegal and unjust?

Example:

Card A is at auction and is sitting at $100.00. Person 1 has the highest bid of $100.00 and person 2, whose max bid is $99.00 is secretly the seller trying to get a higher price. The third bidder put a max bid at $75.00.

In this scenario, if you remove the illegal activity, the listing will end at $76.00 which is now a fair market price. With the illegal activity, it is inflated to $100.00.

The only reason Person 1 has a bid of $100.00 and not $76.00 is because they think they are competing with someone else who wants to BUY the card. If person 1 suspects that person 2 is only bidding to raise their bid, they obviously report the activity. It ceases to become a matter of is someone is willing to pay X, because that person is being deceived that the demand is higher than what it is. The legitimate buyers have a right to fair and equitable trading.

This isn’t academic. This isn’t philosophical.

Imagine if this was a house at auction, or any item with a very high price.

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52

Your whole premise is that shill bidding has no affect on the market? EVERY member of this great site, which includes all the biggest and most successful players in the game, will tell you that is total bunk. In fact, you won’t find a single high end seller or collector who agrees with you. Doesn’t that tell you anything?
Maybe this will…all of us, including many novice bidders, check completed auctions as a tool for either proper listing prices or buying prices. If all you find are skewed and inflated shill bid auctions it could affect how the market reacts. Make any sense? If not, then I’ll go back to my original answer to your post.

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54

I think the source of our disagreement–or at least the tension between our arguments; I similarly disapprove of shill bidding–is the different ways in which we conceive market valuation.

I claim something like the following:

Market valuation, in a particular sale, is the price a buyer freely pays when he knows all relevant facts.

My sense is that people generally agree with that conception of market valuation, but differ from me in their opinions on what constitutes a relevant fact. Whereas I claim the fact that some person bid on an item with no intention of buying it is not relevant to market valuation in a given sale, you have a different intuition.

My question, therefore, is why you believe the fact a shill bidder drove the price up is a fact relevant to market valuation.

Any number of other mistaken impressions–the mistaken impression in a core example of shill bidding being that the buyer assumes all bidders bid in good faith–would clearly not be relevant to market valuation. For example:

  • Suppose A bids $100 on and wins an item because he reasonably believes that B will buy it for $110. Further suppose that A was mistaken and that the opportunity to sell the item for $110 does not currently exist. $100, which A freely paid, is valid market valuation.

  • Suppose A bids $100 on an item and reasonably believes that its value will soon increase to $110. Again, A was mistaken, but $100 is still valid market valuation.

  • Suppose A bids $100 and wins an item. The next-highest bid belonged to B, who did not check is bank account before bidding and would not have been able to pay even if he won. $100 is still valid market valuation.

  • Suppose A bids $100 on an auction at the last minute without having seen the auction price, and suppose he just barely wins the item as a result of someone else’s shill bidding. How is the $100 bid invalid market valuation or any different than a buy it now?

Note: I think the strongest counterargument is that shill bidding is simply a form of fraud and that any fraud in connection with a sale, by definition, taints the sale item’s market valuation. The intuition on which that argument rests pulls opposite my intuition on the fourth bullet, above, and I tend to side with the latter. But perhaps my intuition there, and in general in this debate, is simply an artifact of the hypothetical(s) I am considering…

55

I think you have to realize that FAIR auctions help determine market prices, the market price isn’t just what the 1 highest payer in the world will spend on 1 copy of a card.

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56

I’m not sure you’ve grappled with my arguments or examples, sir. (Also, I didn’t claim that market price is “what the 1 highest payer in the world will spend on 1 copy of a card.”)

57

You keep using examples of different situations that aren’t applicable nor comparable to the situation of shill bidding.

Market fluctuates and gives us fair market value.

Because person A is willing to spend $100 on an item that has previously sold for $100, doesn’t mean an auction can legitimately be artificially raised to that price.

It’s artificial because person A legitimately thinks there is a demand higher than the second highest legitimate bidder.

If that demand is the owner, that isn’t fair nor is it reflective of the actual demand.

I suppose the issue is that the items we are buying and selling can be quite volatile in value.

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58

Is shill bidding possible say at heritage auctions

59

No. Read this thread. There were a couple of people who tried to do a variation of shill bidding, by threatening they wouldn’t pay towards the end of the auction, in hopes to lower the final price. According to the Heritage staff member, this was the first time they experienced this scenario, and they removed the bids before the auction ended.

Shill bidding is not a thing in real auction houses.

60

I don’t know that this will be helpful but… This is supply and demand…

When you have x1 supply and x1 demand, the market value is zero or at minimum the cost of production materials.

When you have x1 supply and x2 demand the price can be any amount up to the demand’s price limit (depending upon the value this item provides to the market). This is what sets the market value.

But wait, the x2 demand is actually x1 demand, because of shill bidding, so the true market value is actually zero. So the buyer has spent more than was necessary to obtain the x1 supply due to the artificial market value created by shill bidding.

Make sense?

@lexleo

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61

Setting aside arguments about what shill bidding does to market valuation, from a purely ethical point of view shill bidding is analogous with cheating on a spouse. There is a foundation of trust between partners (in this case Bidder and Auctioning institution) that is betrayed the second the shill bidding is uncovered.

Now, depending on which ethical theory someone adheres to, this may or may not be seen as wrong.

A consequentialist might look at the case of someone getting away with shill bidding and not see it as immoral, since everyone left the auction happy. To match up with our cheating analogy, as long as your spouse doesn’t find out everything is fine!

However, even the mere risk of being exposed can cause behavior like this to be immoral. If I drive drunk on the road and no one is injured, am I just as moral as the guy who called a cab? The fact that shill bidding can, is, and will continue to be uncovered makes me lean toward it being difficult to justify by the above.

Now some people believe we have a prima facie obligation to be truthful in our dealings with others. This sort of deontological ethics is much more straightforward with this type of problem.

In the end, regardless of whether or not someone thinks shill bidding is morally incorrect seems to be of little importance. Rules of auctions have been deeply ingrained basically forever and participating in the auction means following the rules. Anyone who breaks these should be (rightly :wink:) ostracized from the community.

Just my 2cents

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