A new end-of-auction model for curbing sniping

The online auction market has been growing at a spectacular rate. Most auctionsare open-bid auctions where all the participants know the current highest bid.This knowledge has led to a phenomenon known as sniping, whereby somebidders may wait until the last possible moment before bidding, therebydepriving other bidders of the opportunity to respond and also preventingsellers from obtaining the highest price for an item. This is especially true inthe case of the commonly used second-price, fixed-deadline auction. We considera procedure involving a randomly determined stopping time and show that thisapproach eliminates the potential benefits to a sniper. The scheme enables allbidders to compete more fairly and promotes an early bidding strategy, which islikely to increase the price received by the seller while providing adequatebidding opportunities for would-be buyers.