Game theory is “the mathematics of strategy”, it assumes that if all players in a game play the most rational strategy the result of the game is predictable. “Successful bidding isn’t just what you bid on, it is also the way you bid.”
Just as with a good strategy, “knowledge and information are two critical success factors in bidding for the best approach to winning, you want to build your knowledge and find quality information first. The way in which the different types of bidders utilise knowledge and information to build their bidding strategies gives rise to different types of bidding techniques and winning trends.
Bidders’ Strategies and Bidding Trends
The identification of bidding trends is essential to determining a bidder’s strategy. Penny auction bidding strategies are based on the identification of the bidding trends.
Bidding on News
Another important technique is News Playing. The basic strategy is to avoid bidding if the website you are bidding on is in the news or bid when there is no news about the site. Typical events that can cause lot of people coming on the website which inflates the cost of products are positive news reports about the website, News on Penny Auction or large advertising, marketing or PR stunt. Example Swoopo was in news when it got a large VC funding in the US. Two impact, immediate impact of news was high growth in traffic and long-term impact Swoopo will do much bigger advertisement campaigns and hence more competition.
Suggestion – Follow your auction site on Twitter, Facebook etc and setup a Google news alert for your company
Guessing the Players
The whole system is highly dynamic. Big movements in a small time are possible. The penny auction bidder has to guess the action of the major actors on the auction market. The interpretation of the signals of the big players is crucial. Most big players will enter a penny auction early in the game if they smell quick win. Understanding the actions of big players can give a good insight into how the future of that auction will pan out.
Suggestion – Keep a record on big players and possibly their winnings
Bubbles
Price of a stock is much higher than the value of a product. The Bubble comes into existence due to high speculations and is by far the most dangerous to short term speculations. It is easy to predict by comparing the price and average closing price of all the products.
A Bubble comes into being when unsophisticated/new players get pulled into an auction where they hope to make big returns. More they get into that auction more they get a feeling of being invested. An unsophisticated player doesn’t think in terms of sunk cost and doesn’t set a limit beyond which he/she will stop the bidding. Sophisticated or long-term player can still profit during these bubbles by understanding and following the unsophisticated players quite closely. Once the unsophisticated players move out the more patient players dive in for a kill.
But bubble remains the most dangerous and unpredictable auction and even sophisticated players stay out.
Suggestion – Avoid bubbles like plague
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