The Anti-Ebay: Swoopo

Swoopo (www.swoopo.com) is the self-proclaimed "home of exciting, fast-paced auctions on the internet." You might be looking for a 40" LCD TV on eBay for $600-700, on Swoopo you can get one for barely $100. What's the catch? Bids are made in $0.15 increments and cost $1 each. Unlike eBay, you have to pay to bid every time.

As an example, an Apple iPod Touch sold for $95.40, $133 below market price. The winner bid 35 times, costing an additional $35, but still saving about $100. The other bidders? 635 additional bids were placed, so although the winner won and saved a lot of money, the rest of the bidders lost a significant amount of money to bid on something and lose.

Is it worth it to bid on swoopo? Or is eBay still superior?

That's a really cool site that I haven't heard of before. Its crazy that the site can make hundreds of dollars off of a single hundred dollar product like that. When do you think the best time to start bidding would be? Would you start bidding at half of the market price of the product? It seems the later you start bidding, the higher the probability of winning the auction is and therefor fewer bids need to be made. At the same time the later you start bidding the more expensive the product is. I also wonder how the commitment of paying a dollar per bid affects the bidding. I now if I had already spent $35 on placing bids I would be really annoyed if I didn't win, so I would probably wind up paying a whole lot more just to make sure that I did. I would be really interested to see the math being the bidding strategy of Swoopo

This is a very interesting idea. It sounds like a variation off of an “All Pay Auction” as described on page 144 of the text. In an All Pay Auction everybody pays what they bid regardless if they win or not. Swoopo changes the dynamics by letting you bid in $0.15 increments. While I think that this is a great idea by the inventors of the website for making money, this would be something I would never use. It seems far too close to gambling to me. The more and more people that bid on the same item will cause your chances of winning to be a lot slimmer while the chances of you paying for nothing in return to be greater (almost like the lottery).