pt

Couldn't believe there is no group for fans of the prospect theory, so I set one up myself...

http://www.facebook.com/group.php?gid=107322012632255&ref=ts

Swoopo

This time, I would like to consider one’s chance to win on a swoopo-type web-based auction. Since these websites have attracted millions of users, many began to wonder whether there is a way to enhance the chance to be the final-winning bidder. Accordingly, many websites offer valuable hints and strategy guides, which create an illusion that swoopo is a game of skill.

In case if someone doesn’t know what swoopo is, you can refer to:

http://en.wikipedia.org/wiki/Swoopo

,for a definition.

After searching the web, I found that there are no strategy packs available for free (not very surprising). Since I personally believe that this type of auctioning rests purely on chance, I wasn’t able to come up with any great tactics myself. I found however, few enthusiasts (employees?) of swoopo who tend to stress several important skills that are needed to win a desired item.

1.

Firstly, people tend to compare swoopo to ebay, pointing out that a common way of winning is to bid in the very last seconds of the auction. There are, however, certain significant problems that make this technique less attractive in case of swoopo. Accordingly:

- Since you pay for your bids, there is a high likelihood that you will lose and walk away with less than you originally had.

- Everyone knows that sniping is the only way one should play, hence everyone does it, diminishing your chances to win even more.

- People use software to bid in the last moment, which cancels out any involvement of skills from the game.

2.

In fact, most strategies oscillate around the idea of sniping, stressing the importance of patience, analysis of previous winning prices, or taking the time of the day into an account. Naturally, all of these great ideas are useless, yet some can be even very dangerous. Many players are encouraged to resist the temptations and to place their bids carefully. This, however, introduces a false impression of control into the game.

Let us analyze a sample winning auction:

The £ 40.00 worth Battlefield - Bad Company 2 (PS3) , has been won by a lucky person who had to pay only £4.80 for this item (+£2.90 delievery = £7.70). This means that someone saved £32.00! However, the winning player had used up 52 bids in order to win, which cost him £26.00. All together, the person saved only around £6.20. Obviously this may appear as a decent deal, but it shouldn’t really.

The reason why people are attracted by these scenarios is because they look at the winning bidder only. In fact, the same logic applies to the lottery, where the winning of millions can be achieved with a singly £1 worth ticket. In order to have a clear idea of what we are putting ourselves into, we have to consider how much we can lose. Not surprisingly, the swoopo website omits the relevant information, but some of them could be calculated. Thus, if the winning price was £4.80, and one credit increased the price by 1 penny (!), there must have been total 480 bids (worth £240.00 as 50p equals one credit).

This simply means that all the contributors made the company earn £200.00 on a £40.00 worth video game. Although it is impossible to calculate the probability of winning from the information given at the website, it seems clear that the competition was extremely high, yet it resulted only in £6.00 worth of savings. Whereas it is often the case that savings are very high (someone “saved” £600.00 on a LCD TV) the chances are that you will end up paying for someone else’s prize. If items gather so many bidders, what are the chances that your bids will win? In the example above, £26 worth of credits were needed to win a game for which a person had to pay additional £7. While the auction ended at 2 am, till the last moment there were at least 7 different bidders actively wasting their money. Furthermore, the winning bidder was not consistently the highest bidder during the final minute, which clearly indicates that he/she was extremely lucky.

From these considerations only, swoopo appears very unattractive to me. Although I would love to analyze a detailed bidding history, I am very confident that it would not reveal any pattern that could be used to devise a winning strategy.

More nudges

Nudge blog just published one of the decision making nudges that I observed and sent to them.

You can find the post on:

http://nudges.wordpress.com/2010/02/12/assorted-links-24/

Nudge blog

Authors of the "Nudge", Thaler and Sunstein, set up a blog on which they present new and fascinating incentives, many of which are sent by email by its readers. I actually sent them one myself, but it turns out that it was previously published. Anyway, here I post my nudge to make people stop littering with their chewing gum, which was employed at the Norwich bus station.

For more neat ideas of incentives that make us better decision makers you can visit:

http://nudges.wordpress.com/

10 Big Studies of 2009

Cool stuff, thanks for the link Matt.

http://trueslant.com/daviddisalvo/2009/12/28/ten-psychology-studies-from-2009-worth-knowing-about/