What's the logic behind hiding the reserve?

[lugerholsterrepair]

Herr Merick..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.

This statement seems to make sense but under scrutiny it falls apart. The auction has a VERY small percentage of people that could have an interest. If the market pool is broadened the buyer could achieve a much higher price and it happenes all the time. That's why antique dealers flock to farm auctions. They plan to offer their items to a specialized select clientell that were not at the auction.
I have a Friend who constantly and consistantly buys stuff on Ebay, turns around, offers it again on Ebay and makes a profit. There is a skill in HOW you offer things for sale and WHO you offer them to. This all takes knowledge.

Jerry Burney

[Merick]

Originally Posted by lugerholsterrepair

... 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.

This statement seems to make sense but under scrutiny it falls apart....

Jerry Burney

Not to split hairs with you but my statement stands scrutiny, but only under sterile academic theoretical circumstances where every interested party (the whole market) can attend a fair auction. Also there may have needed to be an assumption about symmetrical information, I forget. Obviously as soon as we leave the classroom and enter the real world my statement immediately falls into very very small pieces. Henceforth let us be friends.

Knowledge is a great thing to have, and is why I joined the forum. God knows I can't get by on my looks alone.

Back on topic; Ed's post #4 is correct on how reserves should be used. Unfortunately they are sometimes misused and my sincere advice is if you don't like what a seller is doing before you enter into a contract with him, you probably won't like what he does after either.