Skip to content

Instantly share code, notes, and snippets.

@tdhopper
Last active February 9, 2026 04:40
Show Gist options
  • Select an option

  • Save tdhopper/ccd9412103dbffd45a7b281c1d79ab3a to your computer and use it in GitHub Desktop.

Select an option

Save tdhopper/ccd9412103dbffd45a7b281c1d79ab3a to your computer and use it in GitHub Desktop.
Auction Theory Applied to Earl's Auctions - Winning Strategy Guide

Auction Theory Applied to Earl's Auctions

Earl's Auction Model Characteristics

Based on the scraped data, Earl's uses:

  • Format: Online ascending-bid (English) auction
  • Buyer's Premium: 18% (critical cost factor)
  • Transparency: Shows current bid, bid count, watch count
  • Timing: Staggered end times (lots end minutes apart)
  • Information: Item descriptions, images, condition notes

Key Auction Theory Concepts

1. Private Value vs Common Value

Common Value Items (retail arbitrage opportunities):

  • Electronics with known MSRPs (Shark vacuum, Woojer vest)
  • Branded goods (Hoka shoes, Creed fragrances)
  • LEGO sets with verifiable retail prices

Private Value Items (personal use):

  • Clothing (sizing matters)
  • Fragrances (personal preference)
  • Home goods (need-specific)

Earl's Insight: Most items have BOTH components. The 72% max bid rule (85% after fees) works because it focuses on common value (resale potential) while capping private value enthusiasm.

2. Winner's Curse

Definition: In common value auctions, the winner often overpays because they had the most optimistic valuation.

How it applies to Earl's:

  • Many bidders don't account for the 18% premium
  • Emotional attachment to "winning" drives bids above rational limits
  • Items with high watch counts (50+ watchers) are most susceptible

Your Advantage: By calculating max bid = retail × 0.72, you systematically avoid the winner's curse. If you lose, someone else overpaid!

3. Bid Sniping vs Proxy Bidding

Earl's Uses SOFT CLOSE

When a bid comes in near the end time, the auction extends (typically by 2-5 minutes). This continues until no new bids arrive during the extension period.

Why This Matters:

  • Sniping doesn't work (auction just extends)
  • Early bidding has less strategic disadvantage
  • The auction becomes more like a traditional ascending-bid (English) auction
  • Final prices tend to be higher than hard-close auctions

Optimal Strategy for Soft Close:

DO: Use proxy bidding at your max (retail × 0.72)

  • Enter your maximum bid when convenient
  • System automatically outbids others up to your limit
  • No need to babysit the auction in final seconds
  • Prevents emotional "just one more bid" escalation

DO: Bid your TRUE maximum from the start

  • Don't bid incrementally ($50, then $60, then $70...)
  • Enter $100 if that's your max
  • Saves time and prevents emotional attachment

DON'T: Try to snipe

  • You'll just trigger an extension
  • Then someone else bids, another extension
  • You end up in a bidding war anyway

DON'T: Watch the auction obsessively

  • Proxy bidding handles it for you
  • Watching just creates emotional attachment
  • You'll be tempted to exceed your max

Soft Close Implications:

Advantages:

  • Reduces "I got sniped!" frustration
  • Everyone gets a fair chance to bid their max
  • True market value emerges (highest bidder wins)
  • Less stressful - no need to camp on auction in final seconds

Disadvantages (for you):

  • Prices tend to go higher (no snipe opportunities)
  • More time for others to research and realize value
  • Emotional bidders have more chances to bid
  • Bidding wars can escalate over multiple extensions

Counter-Strategy: Since soft close tends to drive prices UP, your information edge becomes even more critical. Many bidders will exceed rational prices in the heat of extensions. Your max bid (retail × 0.72) is your anchor - stick to it no matter how many times the auction extends.

4. Information Asymmetry

You Have an Edge When:

  • You know true retail value (most don't research)
  • You understand the 18% premium impact (many ignore)
  • You can assess condition from images (Gemini analysis helps)
  • You know market demand (eBay sold listings, etc.)

Examples from Auction #10823:

  • Woojer Vest: $5 current bid, $299 retail → Most bidders don't know this niche product
  • Shark Vacuum: $8 current bid, $399 retail → "Pre-owned" scares bidders away
  • Creed Carmina: $75 current bid, $320 retail → But 52 bids means others DO know

Strategy: Target items where information asymmetry is HIGHEST:

  • Niche tech (Birdfy camera, Chef IQ thermometer)
  • Specialized brands (Drybar, Woojer)
  • Items with poor descriptions (can't tell it's valuable from title alone)

5. Sequential vs Simultaneous Auctions

Earl's lots end 2-6 minutes apart → Quasi-simultaneous

Theoretical Prediction: Bidders with budget constraints will focus on fewer items, creating opportunity in "overlooked" lots.

Your Strategy:

  1. Identify your top 10 from the Quick Actions list
  2. Prioritize by deal score (not just end time)
  3. Focus on 3-4 items ending within a 20-minute window
  4. If you lose the first, immediately shift to backups
  5. If you win early, stop bidding on similar items

Example: Don't bid on both Hoka shoes (lots #39 and #59) - pick one and move on if outbid.

6. Signaling and Strategic Behavior

What "watch count" tells you:

  • High watch count (50+) = high competition expected
  • Low watch count (5-10) = potential hidden gem
  • Watch count > bid count = people waiting to snipe

What "bid count" tells you:

  • High bid count (30+) = competitive, multiple serious bidders
  • Low bid count (1-5) = flying under radar OR nobody wants it
  • Rapid bid increases = emotional bidding (avoid)

Counter-intuitive insight: Lot #23 (Woojer Vest): 20 watchers but only 1 bid at $5

  • Could mean: Everyone knows it's valuable but waiting to snipe
  • Or: People don't know what it is (confusion over "haptic vest")
  • Risk: 19 snipers could hit in final minute
  • Mitigation: Bid your max ($215) at 5 seconds to close

7. Budget Constraints & Portfolio Bidding

If you bid on 10 items at max bid, you're committing:

  • Total potential spend: $2,156 (sum of all max bids)
  • Expected wins: ~2-4 items (assuming 20-40% win rate)
  • Actual spend: ~$400-600

Theory: Treat this as a portfolio

  • Bid max on ALL good deals
  • You'll be outbid on most (winner's curse gets them)
  • You'll win the items where others didn't research or got distracted
  • Expected value is positive if deal scores are accurate

Don't: Artificially limit yourself to bidding on only 2-3 items because you "might win them all" - you won't!

Behavioral Economics: How Others Will Behave

1. Anchoring Bias

People anchor on starting bid or current bid:

  • Item at $5 "feels cheap" so they bid
  • Item at $75 "feels expensive" even if it's still undervalued

Your move: Ignore current bid. Only compare effective cost (current × 1.18) vs retail × 0.85.

2. Endowment Effect

Once someone makes a bid, they feel ownership and fight to keep it:

  • "I'm winning this!" → overbids to defend position
  • Especially true if they're the current high bidder

Your move: Don't bid early and get emotionally attached. Swoop in at the end.

3. Round Number Bias

Bidders love round numbers: $50, $75, $100

Your move: Bid $51, $76, $101 to beat them by a dollar.

4. Attention Scarcity

Most bidders focus on:

  • Items they personally want (private value)
  • Obvious "name brands" (electronics, designer goods)
  • Items ending first

Your move: Target items 5-10 positions back (lots #50-80) that end in the "middle" of the auction close.

5. Mental Accounting Failure

Most bidders forget about:

  • The 18% premium (biggest mistake!)
  • Shipping/pickup costs
  • Sales tax (if applicable)
  • Resale fees (if flipping on eBay)

Your move: You already account for the 18%. Add others if relevant.

Optimal Strategy for Earl's Auctions

Phase 1: Pre-Auction Research (You're doing this!)

✅ Run the analyzer with --prices ✅ Calculate max bids (retail × 0.72) ✅ Identify 10+ targets with deal score > 70% ✅ Read descriptions for condition, defects, "as-is" warnings

Phase 2: Monitoring (Final 30 minutes)

  • Watch your target lots in browser tabs
  • Note if bidding accelerates suddenly (competition)
  • Be ready to pivot to backup items

Phase 3: Execution (Soft Close Strategy)

Best Practice: Enter proxy bids early (1-3 hours before close)

  • Bid your MAX (retail × 0.72) on all target items
  • Set it and forget it - no need to monitor constantly
  • System automatically outbids others up to your limit
  • You'll get outbid notifications if someone exceeds your max

Don't Chase:

  • If outbid and price exceeds your max → walk away
  • If outbid but still under your max → system auto-rebids
  • Resist urge to increase your max in final minutes
  • Remember: Losing means someone else fell for winner's curse!

Multiple Lots Strategy:

  • Bid max on 8-10 items simultaneously
  • Expect to win 2-3 (others will exceed rational prices)
  • If winning too many early, reduce bids on remaining items
  • If losing all, your retail estimates may be low (good data!)

Phase 4: Post-Auction

  • Calculate actual ROI (factor in premium, time, risk)
  • Track which strategies worked
  • Refine deal score estimates

Earl's-Specific Predictions

Based on auction theory and soft close dynamics, I predict:

  1. Woojer Vest (Lot #23) will see competitive bidding as close time approaches

    • 20 watchers suggest awareness of value
    • Soft close means it may extend multiple times
    • Final price: $80-150 (still good at your max of $215)
    • Your edge: Most won't know it retails for $299
  2. Creed Carmina (Lot #31) will exceed your max bid

    • Already at $75 with 52 bids
    • High signaling → multiple determined bidders
    • Final price: $250+ (over your $230 max)
  3. Shark Vacuum (Lot #80) is the true hidden gem

    • Only 4 bids despite incredible value
    • "Pre-owned" scares people off
    • Low anchor ($8) keeps it under radar
    • Final price: $50-80 (way under your $287 max)
  4. Items ending in middle slots (lots #40-70) will have less competition

    • Attention focused on first/last items
    • Bidders get fatigued
    • Best opportunities

Key Takeaways

  1. Winner's Curse is Real: If you consistently win every auction, you're overbidding
  2. Information Asymmetry: Your biggest edge - know retail values
  3. Soft Close = Proxy Bidding: Enter your max early, let system handle it
  4. Portfolio Approach: Bid max on all good deals, win a few
  5. Ignore Psychology: Stick to the math (retail × 0.72)
  6. 18% Premium: Most bidders underestimate this - you don't
  7. Don't Chase: If outbid above your max, celebrate (you avoided overpaying!)

The 85% rule (max bid = retail × 0.72) is theoretically sound. It:

  • Avoids winner's curse (you lose when others overbid)
  • Maintains positive expected value (profit margin after fees)
  • Provides downside protection (can resell at 85% if needed)
  • Removes emotional decision-making (just follow the formula)

Bottom Line: Auction theory says your approach is sound. Bid max on everything that meets the 72% threshold, expect to win 20-40%, and profit on what you win.

Sign up for free to join this conversation on GitHub. Already have an account? Sign in to comment