.. with unrealistic m-----f-----s."
-- Marcellus Wallace
I was consulting with a friend-of-a-friend who wanted to put up an auction site. I'm under NDA so I can't go into the details but the site was selling items, well, I can't tell you what they are but the price-point was like that of a car. So a major purchase.
His model was a timed auction, like eBay's. I pointed out that fixed-time is fine when there are a lot of auctions compared to the number of bidders (many charity auctions are timed) but are prone to sniping. He suggested adding popcorn-timing -- that is, the auction doesn't end until some number of seconds after the last bid, which is very common in ascending bid-fee auctions like Swoopo and virtually universal with open-outcry in-person auctions ("Going once, going twice") -- but the point was, he had never heard of sniping.
This idiot, who I was told had been very successful in selling these items by traditional means, apparently thought he could start a huge business (he was endeavoring to raise some tens of millions of dollars to launch his site) without doing even basic research.
What the hell? I mean, what the hell? What is wrong with people?
Auctions are complicated. Four or five years ago, Britain auctioned off some space in the radio-spectrum for 3G cell-phones. The auction was very cleverly designed and the British government made more than $30 billion, 2.5% of their GDP! A huge sum, enough that they could lower taxes (although -- surprise! -- they didn't).
Some other countries tried to copy the British auction, although the designers of the auction publicly warned them that differences in their situations required different designs. Those countries made effectively nothing, tiny fractions of the money they had been expecting.
Fools and their money...