Crazybidders

I found an auction site recently. It looks quite interesting & the items were selling at rather affordable prices, until Mamiworm did the calculation for me then I realised its menace.

The rule of the auction goes that each item (usually electronics like iPhone, Wii, digicam, LCD TV and brands like Tiffany & Co., Coach) will start off at $1.00. Each bid placed by the bidders will raise the price by $0.02 and delay the bid ending time by 15 sec. Bintan Resort vouchers usually goes at around $4.00 while the popular iPhone will go at $60.00.

Omg, the site founders can’t do maths?

Dear bidders, this sounds appealing?

The bids on the site are virtual; they have to be purchased using real cash.

1 bid = $0.50

So if you won a iPod Shuffle at $20.00 using 2 bids, you only need to pay

$(20.00-1.00+2*0.50) = $20.00

Dear bidders, this sounds appealing?

Well, if you win the bid, of course it is appealing. But think again, each bid placed by the bidders will raise the price by $0.02 and delay the bid ending time by 15 sec. That means that there are countless bidders out there trying to be the last bidder of $0.02 so that the bid ending time will hit 0 sec successfully.

When the iPod Shuffle is sold at $20.00, do you realize that the site founder has already earned $495.00? Here’s the maths:

$(20.00-1.00)/0.02*0.5 + $20.00 = $495

Despite the winning bidder paying just $20.00, all the other 冤大頭 have contributed over $400 into the site founders’ pocket!

(APPLAUSE!!!)

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A comment from the site:
Hi, thank you for discussing about our site on your blog. We wish to highlight that your story paints only a partial of the true story. You did not discussed about the auctions which ended very quickly and about us losing money on those. In additional, you also had not discussed on the running costs such as marketing, servers, bandwidth, manpower as well. Thank you. :)