Time and time again, we are asked about the risks and dangers of bidding on penny auctions. Here’s a general guide of things to consider before bidding on penny auctions.
The Dangers or Risks of Penny Auction Bidding
The house always wins. Bidders should always remember that in penny auctions, the house almost always wins (unless your BidCactus). Because we know that the penny auction model is designed around the house winning, we always caution bidders to bid smart. There’s no such thing as easy wins and strategy is a must.
Amateurs make tough opponents. For the most part, the Nash Equilibrium theory does not apply to penny auction bidding. Bidders do not typically collaborate in a way that is mutually beneficial to the bidder. In fact, newbie bidders tend to be super-aggressive and often run up the price of auctions in desperate efforts to win. While power bidding works for the individual, it does not work for the whole and it tends to help ensure that the auction always wins.
The penny auction promise can be misleading. At a minimum, penny auctions can be accused of being exaggerated with their advertising claims. Ever see a Quibids commercial on TV? The promise is that bidders can save up to 95% on new merchandise. CAN is the operative word here and many new bidders sub-consciously swap the CAN with WILL and get upset when they don’t win. While we think that penny auctions are 100% accurate, it’s up to the consumer to realize that penny auctions ads are just the like the ads from any other industry- they are designed to sell a product.
Is penny auction bidding dangerous?
We can’t tell you how many times we’ve seen the media write one-sided articles about the dangers of penny auction bidding, acting as though the user has no responsibility or control over auction outcomes. While we feel that there are dangers or risks with penny auction bedding, we don’t not feel that they are “hidden”. The writing is on the walls and the smart bidder will read it and develop strategy based on it.
Penny auction bidding can be dangerous to your wallet if you don’t follow the basic guidelines such as bidding only on buy it auctions, starting small, and other best practices outlined in this blog. Bidding on sites that do not offer basic features such as ‘buy it’ is reckless as it’s easy to waste money with no option to purchase and get bid refunds/replenishment.
If you’re a new bidder interested in penny auction, here are a few articles.resource that you might want to check out.