The E-Bay system?

Question

I am taking economics, and for a project, I was to analyze E-bay and it's bidding and selling system. Can someone tell me how the bidding system works, how a bid that was over bid is nullified, etc?

Answer 1

The bidding system is often referred to as the "Proxy Bid" system. It works like this:

A Seller has an item with a starting price of $1.00.
High Bidder shown is no one, as there are no bids as yet.

Bidder A comes along and bids $5.00.
The Bid now shows $1.00
with the High Bidder is shown as Bidder A,

Along comes Bidder B, who places a bid at $4.50.
The high Bid now shows at $4.75 with the HIgh Bidder as Bidder A. The system kept the $5 bid of Bidder A and uses it against other bidders without letting anyone know the amount.

Along comes Bidder C, who bids $7.50.
The high Bid now shows at $5.25 with Bidder C being the high bidder. The system bid the two proxy bids against eachother until Bidder A ran out of money ($5.00) and then used Bidder C's Proxy bid to beat that amount. (The 25¢ is the Bid Increment).

When a person bids to high for an item, they are responsible for that bid. In the above example, Let's say that along comes Bidder D, who bids (whether it be honestly or accidentally) $100.00. THe high bid would show at $7.75, BUT the Proxy system is still hanging on to an additional 92.25 to bid against new bidders.

Bidder D now realizes his mistake and wishes (for whatever reason) to withdraw his bid. He MUST cancel his bid before the end of the auction! Once the auction ends, he is bound by his bid. A person can withdraw their own bids (but it is recommended that they not, as this counts on their record) by going to the Site Map and looking for the link to "Retract a Bid".

Once Bidder D's whole proxy bid has been cancelled, the high bid again shows Bidder C and the high bid at $5.25.

Answer 2

Their is a policies website connected to e-bay. which tells all about selling and buying.
http://pages.ebay.com/securitycenter/rules_policies.html

I hope this helps.