So, bidding should be leisurely when bidders have little to learn from each other (say, when they're bidding on a new computer that's been widely reviewed) and intense when some bidders are far more expert than others (say, when they're bidding on a heart defibrillator for home use). That's a nice testable hypothesis. Unfortunately, it seems to have failed its first test. When one of my colleagues used eBay to sell an outrageously expensive (i.e., over $1,000) bottle of Bordeaux wine, three bidders submitted eight different bids in the first three days. Now, if somebody is willing to pay $1,000 for a bottle of wine, I'm inclined to guess that he's well informed about its quality. So why are these people revising their bids?
Maybe they're just addicted to bidding. Maybe I am too. Last week, eBay listed a collectible knife with which I am entirely familiar. I bid $225, which exhausted my willingness to pay. But in the final five minutes, I raised my bid to $250, then $275, then $300, and finally won the auction, exhilarated by my victory.
Maybe eBay just makes me giddy. As a free market aficionado, I am intoxicated by the prospect of one-stop shopping for houses, cars, Beanie Babies, and underwear, all at prices that adjust instantly to the demands of consumers around the globe. Or maybe the behavior of eBayers can be explained only by subtler and more carefully tested theories that have not yet been devised. Given the mountain of data being generated by eBay, I suspect those theories will be the stuff of doctoral theses for a long time to come.