eBay isn't first price sealed bid (I guess you understood that, but subsequently you don't make the distinction clear). The underlying mechanism in eBay is actually more similar to Vickrey. You automatically pay just enough to beat the next best bid by the auction's minimum increment.
The actual issue with eBay is that the bidders aren't rational. No amount of modelling with rational agents will tell you anything about how eBay works. We could try to create a system which punished irrationality more thoroughly than eBay, but that doesn't achieve anything except a sense of righteousness for people who understand auction theory.
For example, the very message you quoted exists only because eBay's customers are irrational. eBay earns nothing by telling a rational actor that they've lost the auction, they could determine this for themselves and they have no further interest in the auction because their fair price has been exceeded by another bidder. But in reality the irrational people actually using the service routinely re-bid when they receive this message.
When everyone else is insane, you have to use apparently insane tactics to get what you want. Hence the sniping.
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zvi and
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Date: 2008-10-20 12:38 pm (UTC)eBay isn't first price sealed bid (I guess you understood that, but subsequently you don't make the distinction clear). The underlying mechanism in eBay is actually more similar to Vickrey. You automatically pay just enough to beat the next best bid by the auction's minimum increment.
The actual issue with eBay is that the bidders aren't rational. No amount of modelling with rational agents will tell you anything about how eBay works. We could try to create a system which punished irrationality more thoroughly than eBay, but that doesn't achieve anything except a sense of righteousness for people who understand auction theory.
For example, the very message you quoted exists only because eBay's customers are irrational. eBay earns nothing by telling a rational actor that they've lost the auction, they could determine this for themselves and they have no further interest in the auction because their fair price has been exceeded by another bidder. But in reality the irrational people actually using the service routinely re-bid when they receive this message.
When everyone else is insane, you have to use apparently insane tactics to get what you want. Hence the sniping.