I'm wondering if it's common practice to use some kind of automatic bidding script on Ebay or something like that? I've gotten outbid on a couple auctions at literally the last 00:01 seconds by a few cents. I don't understand how it could happen, since the current bid was quite a bit lower than my maximum bid, it just doesn't seem likely that someone could guestimate the maximum bid in the last second of the auction and bid the exactly the minimum amount higher than that before the auction ends.
Just came across this thread, very good info.
Here's what's happening. When you enter a bid amount, you're telling eBay the maximum
amount you'd be willing to pay for that item. Ebay's system will automatically enter a bid on your behalf for only what's necessary to win the auction, up to and including your maximum. If your maximum is below what the current high bidder has already entered as their
maximum, the system will just increase the current price to your maximum and the other person will still be the high bidder. (If two people enter the same maximum, the earlier one wins.)
For example, let's say the current price is on an item $250 and you enter a maximum bid of $500. Further, suppose that the person with the current high bid has entered a maximum bid of $400 (this is, of course, known only to eBay and not to you). The system will check whether your maximum bid ($500) is greater than the maximum bid previously entered by the current high bidder ($400) and set your current bid to that person's maximum plus the bid increment ($5.00), or $405.00. (The bid increment depends on the current price; the table is listed at http://pages.ebay.com/help/buy/bid-increments.html
.) If someone comes back and bids $475 as their maximum bid, eBay will raise the current price to $475, but you will still be the high bidder. And so on....
When someone bids with just one or two seconds left in the auction, it ensures that what they are bidding is their true, final, maximum bid, since neither they, nor anyone else, will have time to enter another bid if their bid isn't enough to win the auction. In the example above, if you enter $500 as your maximum bid with one second left in the auction, you'd win the auction with a price of $405.00 and the person who set $400 as their maximum bid may wish they'd set a higher maximum.
Some don't like it when they're outbid at the very end of an auction; there are a variety of opinions on whether this practice (sometimes called "sniping") is fair or not. To combat this, some auction sites use a system where if a bid comes in when there's less than, say, 5 minutes remaining, the auction end time is automatically extended to 5 minutes from the time of that bid -- this allows others to counter-bid, similar to a real live auction where there's a "going...going..." phase. There are pros and cons to each type of system -- in my view, the latter system mainly benefits the auction hosting site, who gets higher for-value fees.