How Not To Blog ?

Following I illustrate what could be a new breed of auction system:

::All bidders in an auction, except for the winner, must pay the highest amount they bid to the winning bidder if they lose.

::The winner of the auction then pays the seller's reserve price (known since the start of auction), and keeps the remainder for his/her self. And, of course, wins the auction item. The reserve price is paid regardless of whether or not a winner's profit will be made. (All payments are made automatically by the system.)

or better yet,

::All bidders in an auction, except for the winner, must pay the highest amount they bid to the seller if they lose.

::The possibility that each person could be the winning bidder and end up paying nothing for something they desired would (hopefully) put upward pressure on the price.

::The seller's sense of risk is decreased by the prospects of receiving much more at the end of the auction than that being sold is worth.

In each scenario, the bid price could be lofted dramatically by each bidder's greed. In the two scenarios, the winning bidder essentially could pay nothing and come out ahead.

In the first scenario, "Winner Takes All", bidding for a $200 item could reach an average of $8-9 across 75 participants, for example. You would probably have more participants bidding the price up than in the second scenario due to the winner's added incentive. Most bidders would bid extremely low at first, but towards the end of the auction would probably bid up the price dramatically in order to win.

In the second scenario, "Winner Slides", bidding for a $200 item could reach an average of $6-7 across 50 participants, for example.

How much is a person willing to risk to get something for nothing (or nothing-plus-risk)?

The number of participants would, of course, be limited so that the prospects of winning are still appealing to each bidder. You would also need an escrow system whereby a person would make deposits and then bid against those deposits.

It is, in effect, an auction lottery.

Ming's post about psychologist Max Bazerman's experiments with his students and a bit of money got me thinking on the above.