Bidding on Ebay and other auctions

USA today has an article on irrational Ebay bidding. Apparently researchers found bidders often pay more than they could if they just accepted the "buy it now" price.

The researchers put this down this down to bidders getting carried away with auctions. While that's almost certainly true, I suspect there's also a mentality that an auction will always result in a bargain.

I used to go to technology auctions and and was an early adopter of the Grays Online website. One thing I discovered very early was that the average punter pays way over the odds for computers and electronics at these auctions and it's why I rarely bother with them these days.

One thing I've always noticed is that bidders don't know the retail price of items. Often you see somebody paying well over what it would cost to buy at the local computer store.

Another factor that trips buyers up is not understanding hidden costs. An observation in this article was that Ebay bidders are suspicious of hidden charges but often didn't consider shipping fees.

In computers there's even more hidden costs. Usually an auctioned second hand computer doesn't come with software licenses and warranties. My view is this alone reduces the value of the box by 60%.

I reckon auctions are a good way of buying and selling. But when you're buying the most important thing is you need to be aware of the retail price before placing a bid.