# Proxy bid

> Mediated Wiki article. Canonical URL: https://mediated.wiki/source/Proxy_bid
> Markdown URL: https://mediated.wiki/source/Proxy_bid.md
> Source: https://en.wikipedia.org/wiki/Proxy_bid
> Source revision: 1254147801
> License: Creative Commons Attribution-ShareAlike 4.0 International (https://creativecommons.org/licenses/by-sa/4.0/)

Second-price auction without sealed bids

This article has multiple issues. Please help improve it or discuss these issues on the talk page. (Learn how and when to remove these messages) The examples and perspective in this article may not represent a worldwide view of the subject. You may improve this article, discuss the issue on the talk page, or create a new article, as appropriate. (December 2009) (Learn how and when to remove this message) This article needs more citations. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. Find sources: "Proxy bid" – news · newspapers · books · scholar · JSTOR (December 2009) (Learn how and when to remove this message) The topic of this article may not meet Wikipedia's general notability guideline. Please help to demonstrate the notability of the topic by citing reliable secondary sources that are independent of the topic and provide significant coverage of it beyond a mere trivial mention. If notability cannot be shown, the article is likely to be merged, redirected, or deleted. Find sources: "Proxy bid" – news · newspapers · books · scholar · JSTOR (May 2015) (Learn how and when to remove this message) This article may contain original research. Please improve it by verifying the claims made and adding inline citations. Statements consisting only of original research should be removed. (May 2015) (Learn how and when to remove this message) (Learn how and when to remove this message)

**Proxy bidding** is an implementation of an [English](/source/English_auction) [second-price auction](/source/Second-price_auction) used on [eBay](/source/EBay), in which the winning bidder pays the price of the second-highest [bid](/source/Bid_price) plus a defined increment. It differs from a [Vickrey auction](/source/Vickrey_auction) in that bids are not [sealed](/source/Sealed_bid); the "current highest bid" (defined as second-highest bid plus bid increment) is always displayed.

## Description and use

[eBay](/source/EBay) uses the term *proxy bidding* to refer to their implementation of an [English](/source/English_auction) [second-price auction](/source/Second-price_auction), in which the winning bidder pays the price of the second-highest [bid](/source/Bid_price), in addition to a defined increment.[1] Though similar to a [Vickrey auction](/source/Vickrey_auction), the bids are not [sealed](/source/Sealed_bid). The "current highest bid" (defined as second-highest bid plus bid increment) is always displayed.

## Comparison and analysis

In a standard [English auction](/source/English_auction), the winner pays the amount of their bid—regardless of competitors' bids—and it is therefore desirable to place a bid that exceeds the current highest bid by the smallest possible increment.

Conversely, under proxy bidding, the price paid is determined only by competitors' bids and not by the amount of the new bid; this eliminates the [economically rational](/source/Rational_economic_man) incentive to place a bid below the amount one is willing to pay or to place multiple increasing bids. An "economically rational" bidder will therefore bid the maximum amount they are willing to pay on their first bid, and never raise their bid.

eBay's approach, however, reveals the bidder's limit to rival bidders early in the auction, which can sometimes artificially inflate the price of the item higher than its actual intrinsic value, and ultimately encourages the practice of [auction sniping](/source/Auction_sniping).

## References

1. **[^](#cite_ref-1)** ["Proxy bidding"](https://web.archive.org/web/20031203092720/http://pages.ebay.com/help/buy/proxy-bidding.html). Archived from [the original](http://pages.ebay.com/help/buy/proxy-bidding.html) on 2003-12-03.

This game theory article is a stub. You can help Wikipedia by adding missing information.

- [v](https://en.wikipedia.org/wiki/Template:Gametheory-stub)
- [t](/source/Template_talk%3AGametheory-stub)
- [e](https://en.wikipedia.org/wiki/Special:EditPage/Template:Gametheory-stub)

---
Adapted from the Wikipedia article [Proxy bid](https://en.wikipedia.org/wiki/Proxy_bid) by Wikipedia contributors ([contributor history](https://en.wikipedia.org/wiki/Proxy_bid?action=history)). Available under [Creative Commons Attribution-ShareAlike 4.0 International](https://creativecommons.org/licenses/by-sa/4.0/). Changes may have been made.