Auction sites are popping up all over the place with new ideas about how to attract bidders with the appearance of huge bargains. The latest format I have discovered is the “lowest unique bid” auction. It works like this. A car is on the auction block. Bidders can submit as many bids as they wish ranging from one penny possibly to some upper bound, in penny increments. The bids are sealed until the auction is over. The winning bid is the lowest among all unique bids. That is, if you bid 2 cents and nobody else bids 2 cents, but more than one person bid 1 cent, then you win the car for 2 cents.
In some cases you pay for each bid but in some cases bids are free and you pay only if you win. Here is a site with free bidding. An iPod shuffle sold for $0.04. Here is a site where you pay to bid. The top item up for sale is a new house. In that auction you pay ~$7 per bid and you are not allowed to bid more than $2,000. A house for no more than $2,000, what a deal!
I suppose the principle here is that people are attracted by these extreme bargains and ignore the rest of the distribution. So you want to find a format which has a high frequency of low winning bids. On this dimesion the lowest unique bid seems even better than penny auctions.
Caubeen curl: Antonio Merlo.
Cheap Talk 
8 comments
Comments feed for this article
December 10, 2009 at 2:31 am
Lones Smith
Unlike the funky all-pay auction sites like Swoopo, this one is the first to truly stick it to modern auction theory’s Revenue Equivalence Theorem, and simply go commando (i.e. behavioral). As a non auction theorist, I am all for this. 🙂 But as a behavioral skeptic, I wonder why anyone would pass on Ebay or even Swoopo for this claptrap auction.
Andreas Park and I essentially explored the economics of a special class of weirder variants on all pay auctions in our “Caller Number Five, and Related Timing Games” (an editor at TE killed a far cooler title 🙂 ). For instance, the second highest bidder may win…. An implication of our analysis is that such auctions can induce atoms in bid distributions, but raise too little revenue.
Cheers, Lones
January 9, 2010 at 9:40 am
Wonkie
Do you know where I can find a distribution of bids for any of these auctions – I’m curious to know whether people just guess or use a strategy of some sort
January 14, 2010 at 9:54 am
Snagoo
Thanks for the article!
Just wanted to mention – Snagoo is another Lowest Unique Bid site, but at the end of the auction the users that don’t win get all their paid bids back to use in the other auction format (“Reveal” auctions). We call it our “No Losers” policy 🙂
Have a great day!
May 5, 2010 at 4:30 am
Snagoo
Hey! Just wanted to mention that Snagoo has completely revised it’s site, and now all bidding is free! It doesn’t cost anything to play, you only pay if you win the item (and at that point, you’re getting about a 95% discount).
Check it out!
October 11, 2011 at 7:07 pm
Unique Bid Homes – Lowest Unique Bid | 1pennybid.co
[…] and Gold Coast have a Crimebusters Website.Cairns left out againGold Coast QueenslandLowest Unique Bid .recentcomments a{display:inline !important;padding:0 !important;margin:0 !important;} […]
May 15, 2012 at 5:24 pm
Veibe User
Check the new site.. http://www.veibe.com.. they have just started and have got registration and referal bonus too
July 7, 2012 at 4:40 am
sakhawat ALi Arzoo
what will be the lowest unique bid between 1 and 90????
August 7, 2012 at 2:50 pm
9ZillA
You can check out https://www.9zilla.com, for a different type of auction experience. We are a Sealed Bid Silent Auction site, that limits bids in every auction, allowing users to submit multiple sealed bids per auction.