What's the logic behind hiding the reserve?

Merick · 02-25-2009, 04:17 PM

Here is something to wrap your mind around, assuming an auction is fair(which anyone that has used e&@y or gone to a farm sale knows few are) and all interested parties are present, then the winner of the auction actually overpays for the item. How so? Something is only worth what you can get for it. Therefore the most the winner could get for what he just bought is to sell it to the second highest bid, having overpaid the difference.

That said we live in an imperfect world with imperfect markets, and I have bought things at a farm sale and sold them for 100 percent profit before I had even paid for them myself.

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02-25-2009, 04:17 PM	#17
Merick User Join Date: Feb 2009 Posts: 32 Thanks: 1 Thanked 6 Times in 4 Posts	Here is something to wrap your mind around, assuming an auction is fair(which anyone that has used e&@y or gone to a farm sale knows few are) and all interested parties are present, then the winner of the auction actually overpays for the item. How so? Something is only worth what you can get for it. Therefore the most the winner could get for what he just bought is to sell it to the second highest bid, having overpaid the difference. That said we live in an imperfect world with imperfect markets, and I have bought things at a farm sale and sold them for 100 percent profit before I had even paid for them myself.