The black art of Sniping
Depending on whom you talk to, sniping is either a gift from the Gods or the spawn of the devil. As usual, the truth lies somewhere in between.
What is sniping?
As a buyer I love sniping and have used it well. As a seller, I hate it. It is also extremely unfair to those on dial-up connections, since they do not have a fast enough connection speed to keep up with the changes.
So I end up paying ten dollars. Now here's what the snipe looks like:
That's how it works, at least in theory. Sniping is neither good nor evil - it is simply a consequence of eBay's decision to end listings at a specific time. Sniping takes advantage of those who don't know how to bid, and those who have slow Internet connections. Ironically, eBay could put snipers out of business in a heartbeat by the simple expedient of extending auctions after last-minute bids, but for reasons best known only to them, they choose not to.
I recently stumbled across an excellent academic paper in the subject of bidding and sniping, called "The Timing of Bids in Internet Auctions: Market Design, Bidder Behavior, and Artificial Agents" by Axel Ockenfels (University of Magdeburg, Germany) and Alvin E. Roth (Harvard University). It is available in PDF form here .
Defence against the Dark Art
Simple rule for bidders: Put in your maximum bid - the highest amount you are willing to pay -
and walk away. The proxy bidding system will bid up to your maximum to fight off other bidders, until someone bids a higher amount than you. You may still lose, but you have the comfort of knowing that the item went for more than you were willing to pay.