The practice of snipe bidding on E-Bay has been drawing a lot of attention recently. Snipe bidding on E-Bay is the practice of waiting till the very last seconds of the auction to submit a bid so there is not enough time for another bidder to respond with a higher price.

A South Korean research group actually developed a formula to test whether snipe bidding on E-Bay or early bidding is the most effective way to win the bid. They then tested the formula on 264073 items sold in a single day on E-Bay and a year's worth of sales on the Korean partner of E-Bay amounting to a blistering 287,018 sales. The results-snipe bidding on E-Bay is indeed a more effective way of winning the bid. The South Korean physicists found that the probability of winning the auction items drops with each subsequent bid.

Another team has been studying snipe bidding on E-Bay for several years, only these two approach it from an economic standpoint. The economists state that snipe bidding on E-Bay helps both the buyer and the seller. The buyer benefits because the prices are not driven up in a bidding war. The seller benefits because the possibility of snipe bidding on E-Bay may attract more bidders.

The question then becomes, if both studies recommend snipe bidding on E-Bay as the preferred approach, why doesn't everyone do it? It's because on E-Bay, it's not the last bid that wins, it's the highest bid. Sometimes sniping just doesn't meet the deadline either.

The format on E-Bay is set up in such a way that a person may place a proxy bid that would be a reasonable price and make that bid early in the auction. Then if the sniper tries to place a last minute grab for the item with a just higher than the early bid, there is still time for the proxy bid to kick in and win the auction anyway.

E-Bay studied the various ways of conducting their online auctions and determined that the hard-close was the best method. A statement on their site actually promotes sniping for the additional excitement and anticipation. It is felt that more people will attempt to bid by fostering sniping.

Snipe bidding on E-Bay even has some software developers working with the concept in order to place winning snipe bids. It is unlikely that E-Bay will move to another sales model when the existing one is so successful.

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