The new "losing bidders can apply bids against the cost of the item" is just plausible deniability for their ultimate business model, which is selling 100 people the same Wii.
If they end up selling 100 people the same five Wiis (1 at a deep discount, 4 at retail), it is still the same business model from the perspective of 95% of the participants of the transaction, who end up spending a lot of money but get no Wii.
I refuse to call them an auction site because that is just sheep's clothing. Their model has absolutely nothing intrinsically auction-like about it -- take a look at their "auctions" for CASH in which the putative "bid price" will never actually be paid by anyone. It just exists to sucker more people into paying scam participation fees.
Edit: Maybe there's an explanation for this but it still seems fishy to me.
How is it possible that the same people placed the same bids (in the same order) and end up with exactly the same amount for two different items in two different countries?
What is the probability of this happening? This means that even if they were all following these two items and placing the bids in the same order, nobody else outside of this group has placed a bid.
EDIT: At first I thought they were just putting up dummy back-dated auctions to make the site seem more popular (and the deals better).
But check out the related auctions across the top for both pages -- the same numbers with the same winning bidders with the same (or similar!) products. All of them. So Germans are indeed bidding against US users -- one in dollars, the other in Euros? That doesn't make any sense
So clearly people just get an item "similar" to the one they won. You'd think for the massive house advantage they have, they could at least deliver the exact product that you thought you won.
Yes, that's right. In the TechCrunch thread about this, "Valentin" noticed that this is documented in their FAQ as well. The reason given is that the item being sold off may not be available in one of the countries. I (@dmolnar) gave an example where the US bidders win an iPhone 3GS, while the UK bidders win a 3G. Quite different propositions!
Pierre Carion then pointed out that as far as he can tell, the API doesn't even count the type of currency. So even though it's not remotely fair, a 100 USD bid will beat a 99 EUR bid just because it's the most recent bid.
He calls it evil but doesn't provide much justification other than what he assumes people already believe.
In the interest of philosophical discussion... why is maximizing profit using knowledge of consumer behavior "evil" so to speak?
If someone uses their available knowledge and decides to enter a swoopo auction, is it really much different than choosing to play at a casino even though we know the house is against us (gambling's existence is something that few outside government seem to have a problem with?)?
Is the major hang up that people can pay but not win? If this is known up front can someone provide the rationale behind this being "evil"?
Funnily enough I find that the debate over swoopo being evil seems to parallel the debate over spec work being evil (just different currencies involved).
Can someone point me to literature on the rational arguments for and against consumer protection?
In the interest of philosophical discussion... why is maximizing profit using knowledge of consumer behavior "evil" so to speak?
I wouldn't go as far as saying this auction idea is 'evil' but I personally feel it is morally dubious. This site was put together by probably quite talented people with knowledge of game theory. How are these people using their talent? To make the world a better place, to forward the human race or to take money off others who are more ignorant than themselves?
These auctions have losers who lose money and gain nothing. Maybe those who lose enjoy the chase. However, I personally wouldn't be comfortable working on a system such as this.
> In the interest of philosophical discussion... why is maximizing profit using knowledge of consumer behavior "evil" so to speak?
Because people can be deceived. Math is hard. If I were to belive Coding Horror, even Paul Erdos didn't understand the Monty Hall problem.
If you take profit on people's naivety, you're evil. Because every human being is ignorant about something. We're not perfect. We're not always right.
BTW, I'm in favour of gambling, when it's clearly marked as such. You don't get better at Swoopo by playing Swoopo, you only win by not playing it all. To say Swoopo labels itself as a system where luck does not play the main role is deceiveing.
"Evil: preying on human weakness for your own personal gain at others' expense".
I could easily make a dozen arguments where respectable companies do exactly that. For instance, is Starbucks preying on the "weakness" of humans that desire caffeine? Is EA preying on the weakness of humans that desire an escape via gaming? By your definition of evil, everyone and everything participating in a capitalist economy is evil.
Frankly i see nothing wrong with Swoopo, even if some end up worse off than they would have been had they not participated. This is because i place the burden of responsibility on the actor, not the facilitator. Caveat Emptor.
In a free, ideal capitalist exchange, it is not a case of one party benefiting at the others expense. It can't be, by definition, because then the free agent that is losing would not enter into the exchange. It is an exchange that both people benefit from. This is examined in more detail in the first couple of chapters of http://www.daviddfriedman.com/Academic/Price_Theory/PThy_ToC... (a textbook, not a blog post), but the short version is that due to the fact that different entities have different valuations on different items, free trade results in scenarios where both parties pay X-personal-valuation and receive X+N-personal-valuation, resulting in a profit. (The big failure people have in grasping this is missing the facts that valuations are personal, and valuations != money. After that, this logic flows simply and inexorably.)
Obviously not all exchanges are free and ideal, but both the cases you cite (Starbucks and EA), it's pretty close. I'd say 100% in the Starbucks case (you can get coffee from lots of places) and a little less so in EA's case due to the fact they have an IP monopoly on EA games (you can not obtain a Madden game from a non-EA source), but still, nobody's forcing you to buy Madden games either.
Swoopo is not like that. It is not a mutually-beneficial exchange between two parties; one party wins and numerous parties lose, with only one other party winning in theory (the auction "winner") and that still only at the discretion of Swoopo (if the "winner" is a plant, how would you tell?). Because the losing party entered into it freely and with reasonable knowledge of what is going on, I do not favor forcibly shutting it down either, as I can not imagine what such a law would look like anyhow. But we can still call a spade a spade; this is not like a free market exchange. This is a con game.
(The other possible out is that the auction losers are paying for an intangible feeling of fun or something, which is a valid thing to do if you choose not to judge people's value functions, but I suspect that a fair analysis would show that they are not really winning on this front either. Part of that analysis would be to show that Swoopo is the best way to obtain that feeling and I have to imagine a conventional casino is a better choice there for most people.)
>(The big failure people have in grasping this is missing the facts that valuations are personal, and valuations != money. After that, this logic flows simply and inexorably.)
Till this point, I thought you were defending Swoopo and your logic actually made sense to me because the parties involved in the auction have different valuations. If a person spends USD 10 bidding on a product, the mere possibility of having a USD 1200 product for such a low price may be more valuable to him than Swoopo's valuation of the transaction (USD 10). Plus the suspense and thrill adds to the valuation by the bidder :)
"Because the losing party entered into it freely and with reasonable knowledge of what is going on, I do not favor forcibly shutting it down either, as I can not imagine what such a law would look like anyhow."
That's not an argument against the definition, that's an argument about whether certain actions meet it. I think it's clear that Swoopo does, and actually, yeah, I do think that a lot of other companies are or approach evil in the way they do business. Just because it's widely done doesn't mean it's good.
What about if nearly everyone is worse off? Putting the burden of responsibility on the actor is fine, but Swoopo is not in the same category as Starbucks and EA, and claiming that everyone participating in a capitalist economy does so at the expense of others is pretty disingenuous.
Claiming that everyone participating in a capitalist economy does so at the expense of others is pretty disingenuous.
Perhaps not everyone, but it seems to me that a large portion of firms in a capitalist economy prey on some human weakness or another, to varying degrees.
* it seems to me that a large portion of firms in a capitalist economy prey on some human weakness or another, to varying degrees.*
Wow.
I take it you have a really, really broad definition of "human weakness" for this belief system to continue working for you.
Car broken and I can fix it for 20 bucks? You have a weakness for not knowing how to do auto repair. Need a good resume and come to my resume service? You have an inability to write and a lack of work, due to a weakness of the system. Need a program to balance your checkbook? You obviously have a problem with math, could be lazy in your account habits, etc.
This kind of definition will work anywhere -- suggesting that perhaps a new one would be better.
advertisement falls under freedom of speech as long as no spurious claims are made. people have free will. the evil advertising box doesn't force people to do anything.
I noted that DanielBMarkham didn't have to stretch that far and use examples such as a resume service as preying on the "weakness" of humans not being able to write as an reducio ad absurdum argument that cellis has an overly broad definition of human weakness when cellis stated that a large portion of firms in a capitalist economy prey on some human weakness or another. I continued to note that the psychologically manipulative tactics used in advertisement are used by a large portion of firms in a capitalism economy in order to prey on some human weakness or another, implying that it is not as broad a definition of human weakness as DanielBMarkham makes it out to be.
"Um, what planet are you from? At least 3 major world religions (Judaism, Christianity, Islam) regard gambling as evil."
They also regard all manner of activity evil that most people (and even adherents) find perfectly acceptable and engage in every day. Bacon, beer, and shamefully clad women come to mind.
So let me ask what planet you are from. Have you ever gone to a casino and asked the gamblers what their religion was?
Wait, what? Pointing out that there exist institutions that aren't the government that regard gambling as evil somehow means I think people don't gamble, or that I think those beliefs are valid? That makes no sense.
Neither. I was pointing out that plenty of other people think it is, in response to GP's statement that "gambling's existence is something that few outside government seem to have a problem with".
There are a couple of explicit condemnations of gambling in the Qur'an, but not in the Bible [as far as I know, corrections welcome] - though things like condemnations of "love of money" might count as indirect condemnations of gambling, I suppose.
I recognise that some religious traditions take guidance from more than just the official holy books, but even the official Catholic view seems fairly neutral: that gambling is not immoral in itself, as long as certain conditions are met:
All religious traditions take guidance from more than just holy books (many religions do not even have holy books), and the idea (or assumption) that laypeople can determine religious truth by reading the holy book themselves is pretty much restricted to Protestant Christianity.
The fact that Swoopo promotes itself as an auction/shopping site and lists "strategy" as part of the experience skates uncomfortably close to the "no fraud" clause listed in that link, although offering discounts to losing bidders would seem to give them a solid "it's only gambling if you choose to treat it that way" out.
There are none in the Bible. The closest you get are exhortations about work, or warnings about pursuing money. Some folks extrapolate from there, but the arguments against it are always indirect. More often than not, they're not scriptural at all, but are based on practical wisdom ("It destroys lives! It's unproductive!") that doesn't have a lot of basis in actual practice.
It's not anything like widespread enough that you could say it was a "Christian teaching," though. While you can still find people who say it's sinful (and you will always be able to), it's getting so that standard Southern Baptist Sunday School materials say, "Is Gambling a Sin? Well . . . not reeeeeaaallly . . . but we don't think it's a good idea." And I think those guys are usually just about the last to let go of issues like that.
Not in the bible, but the talmud says that someone who "plays with doves [i.e. gambles on pigeon races]" is disqualified from being a witness (i.e. their moral character is suspect).
Gambling is considered a form a stealing since the person who lost doesn't actually want to give their money to you, they are forced to by the roll of the dice. In normal commerce you get something when you pay. (And don't say people enjoy playing, no one enjoys playing, people enjoy winning.) I believe, but am not sure, that lotteries are not considered as bad though.
funny thing about the internet, virtually everyone mistakes discussion for argument. Very little of what I said was a statement of belief.
I should perhaps have said that I was simply looking for someone to explain the sides so I can make a better decision about how I view it rather than just taking the viewpoint of an article in slate as certainty
everyone's mad they didn't think of it first. it's the most brilliant scam I've ever encountered, doubly so because you can make the case that it's not technically a scam.
I had an idea for a non-evil gambling site a while back - basically runs at a profit with a small bias against the house. Not a scam, but it has a 'compelling mechanic' component in common with Swoopo (albeit a different mechanic).
On one hand I think it could make some cash while not being as dodgy as a regular gambling site, but on the other hand I don't want to encourage gambling addicts with the positive feedback.
I'm just glad it's not my only money-spinning idea :)
Ahem, actually it's just a scam, in it's purest form. No, it doesn't qualify as gambling because your chance to win is not determined by luck but solely at the discretion of the people running the show.
Imagine you enter a casino and someone offers you the following game:
There's a red button, one push costs $1. Anyone may push as often as they want and can afford. If the button isn't pushed for one hour then the last person who had pushed receives $1000 USD (fixed).
Fine you may think, I'll come here at thanksgiving when nobody is around and push it then. Except that there's always this one sleazy guy lurking in the corner, even at thanksgiving, with that strangely swollen thumb and an seemingly unlimited budget...
Even with the new option to buy the products at full price, it would still be a scam since they've acquired customers by cheating them into thinking they would have the possibility to buy at a discounted price.
Anyway, there's an issue with the transparency of their operations which is not required in an auction site like ebay since on ebay the winner of the auction must be real, in order to buy the item from the seller.
In reality you don't hire people for that, way too risky.
You simply have a few "good friends" run a bidbot-script on some leftover machines. That's near impossible to detect (just create new accounts and cycle credit cards regularly) and makes the scheme entirely bulletproof.
Well, I agree that there's nothing morally wrong about it in the abstract (but I think gambling is quite all right too, if the rules are on the up and up), but we don't know that they're not cheating.
They could have people acting as shills, "winning" the items and ensuring that no goods ever have to actually be delivered, or even exist at all. This would be impossible for a casual user to detect.
Finally, I gave up when it became clear that Swoopo could make money faster than I could count it.
Two thoughts come to mind. First, it's a rigged game: don't start playing it. Second, people are going to clone this business model. Swoopo is simply one of the first-movers.
The Natrium Bag of Discount, an item which give you 5% off on bids.
The Necromancer class, which can resurrect dead auctions, and kill top bids (with a 15m cooldown timer).
The Tamer, which can invoke pet-bots that automatically bid $0.25 each.
I really think you're onto something here derefr... a system that gives you the possibily for real life money manipulation, self-loop'ed into skill/item progression!
If I could write something in a week, its an interesting idea in social psychology that I'd love to play around with. It's not just the money -- it's finding out what would work and what wouldn't. It'd be a fascinating exploration of the human mind.
Would people do this with real money for virtual goods? Would they trade things that would have more monetary value later for things that have less monetary value now? Could you just write an app that had people pushing a button for "free" cash? Is there a tie-in to social networks? Could you tie it into the iPod, or an addictive game? with the right combination, the whole thing could go viral.
The idea of "cheating" people doesn't interest me -- If I did something like that I'd be clear about this being for entertainment value only and I'd even support limits on the amount of play per day. It's just the rest of the man-machine interaction that's so cool here. Are the people somehow "broken" and the machine is taking advantage of them? Or is this just entertainment, no more different than going to Vegas for a weekend?
No surprise, the basic idea is based on the "dollar auction" which has been a pretty standard part of every undergrad economics class for the past 20 or 30 years.
Text messages are totally a scam because of the markup factor... but Swoopo also has the lottery factor. That is the vast majority of people get NOTHING for their $10, $100, $1000. I don't understand why people are trying to defend it on a technicality. Yes, technically it may be legal, however it's ripping stupid people off left and right.
The thing is they don't. I think most people at HN have been introduced to Swoopo based on articles analyzing just how much of a ripoff it is by running some numbers.
To the first-time visitor it is not clear at all that they are basically playing a lottery with a very low payout. Calling it an auction is misleading because in an auction you only pay if you place the winning bid. This is more like a raffle, but it's not labeled as such.
Text messages are a scam. Especially when the company also charges you that .15 when you receive a message without consenting to it. And when there are no alternatives and little price competition because it's commonly accepted practice in the industry to make a huge windfall off of texting.
I am neither a good programmer nor an expert in machine learning or whatever, but look - for each item they have a public bidding history with usernames. So,
1. Write a script that will pull this info once a second
2. Analyze it - You're interested in predicting when a person will quit bidding so that you can join the auction in the latest possible moment and win the item with a minimal number of bids. You have time series of each user's bids (with a distinction of whether they were made manually or automatically) and a dollar value of the item price.
i'm pretty sure the last idea i proposed on part two would work fairly well. have the script watch bid activity and when it looks like there's only one other user using bidbutler, turn it on and let it spend money. as soon as a third user starts using bidbutler, turn it off to save money and let the other two fight it out. since both users probably won't use the same price ceiling, it should be pretty clear when one user drops out and the other keeps bidding with bidbutler. at that point, turn it back on and repeat until you're the last one using bidbutler.
I'm not a programmer either, but as someone with an econ undergrad degree going into grad school both the data/analysis and the method of obtaining it are really of interest to me. If anyone can point me in the right direction in terms of what I would need to create such a script I'd be willing to do the work and share the results here.
Well, you need a Firefox with installed greasemonkey, which is an extension that allows you to run your scripts on a page that you're looking at in Firefox. The scripts have to be written in Javascript. The script will have to locate the <div> element that contains the bidding history, then once a second copy the part of its content that was updated since last time to another <div> - where ALL bidding history on this page will accumulate. Then, when the auction ends, copy the contents of this div into excel or whatever you use for analysis and parse it (i. e. put time, price and username into different cells).
In the link above provided by JimmyL, the author says that he wrote such a script (and gives a description of his experiment). Try to email him, I think he'll share it.
Thanks. I saw the link after posting and saw that the author had occasionally had some trouble in the last second (due to swoopo's handling of all the simultaneous bids it seems). I wonder how much this will skew any results. Also, there are 179 live auctions right now, but I figure tracking about 25% should be more than enough for statistical purposes.
Sounds a lot like all the other press swoopo has got. While on the surface there new offer to allow the bidder to make up the difference for the item on lost bids seems like an improvement, there retail prices seem to be high enough to negate any benefit there is buying online over your local retailer.
These kind of sites were invented in the UK a few years ago. The idea is based on a practice where con artists set up similar kind of "auctions" in the real world (mainly in unused shops on London's Oxford street).
The hook is that as you walk past the shop you see that you have the chance to get a play station for $1. So, you and about 100 other people pay $1 with the hope of getting a play station. After everyone's put their money in then they "randomly" select 5 people in the audience and hand over the play station to them.
Of course after the show, the audience "plants" secretly give the play stations back. So, in essence they keep recycling the same play stations all day long and real punters keep paying $1 and not getting anything.
If they end up selling 100 people the same five Wiis (1 at a deep discount, 4 at retail), it is still the same business model from the perspective of 95% of the participants of the transaction, who end up spending a lot of money but get no Wii.
I refuse to call them an auction site because that is just sheep's clothing. Their model has absolutely nothing intrinsically auction-like about it -- take a look at their "auctions" for CASH in which the putative "bid price" will never actually be paid by anyone. It just exists to sucker more people into paying scam participation fees.