Pool.com changes their auction mechanism

[GeorgeK]

http://www.pool.com/help/faq.aspx#2Phase

I bet they will switch back to the old system at some point.

 

[FusionX]

I guess so. The new system seems weird and defeats the basic idea of auctions. Its just a ploy to make more money by forcing the bidders of round 1 to put high "blind" bids.

 

[Steen]

Blind bidding sucks

 

[Chaiki]

I love how they always label these changes as exciting innovations. Personally none of this is making my nipples hard. Why don't they just ask us to tear $100 bills up as fast as we can while they pick names for us? "Steen rip up a hundred now! Congratulations you have won crapisreal4u.com"
THAT would be an innovation.. possibly just as welcome.

Re: Pool.com is pleased to announce exciting new innovations to our Deleting Domains services.

 

[strongvis]

http://www.pool.com/help/faq.aspx#2Phase

I bet they will switch back to the old system at some point.

No. no. no George, they'll just make another "New and Innovative " improvement on this system. Did anyone have a problem with the old system . . . besides the guys cashing the monstrous checks at pool ??

I have participated in blind bidding before and it's aggrevating. . . to say the least.

 

[christopher_c]

Email received about 5 minutes ago from them, just finished emailing suggestions@pool.com that their new system sucks. You should do the same.

Domains don't drop every 3 days, they drop each day and I don't want my funds stuck in a bid that I don't even know is the top one. That's besides the obvious of who wants to pay the absolute maximum they can for a domain.

 

[Togoodhlth]

Yeah I almost fell over when I saw the new auction system.
An exciting innovation for pool but it sucks for the rest of us. They used to squeeze every last nickel out of a domain I guess now they are looking to squeeze every last penny.

 

[isdtv]

I guess they don't think they are making enough money. Acution amount would go higher.

 

[Steen]

I wonder if people will bid as high if it's blind though?

Besdides Ult/BD and a select others (I hope they don't have emotions). Us emotional people I think will bid lower. Thoughts?

 

[Edwin]

It's lousy for bidders, but so long as even ONE bidder is keen on a particular name and has deep pockets, it's great for Pool.

I guess it could also lead to "surgical strike over-bidding" tactics by the big players. For example, if they (privately) would be willing to pay up to $20,000 for a particular name but think that other parties would be wary of the sealed bid process and start low, they might bid $10,000 sealed in the hope that the other bidders will be so terrified by the gap between their sealed top bid and the $10k one that they simply shrug their shoulders and give up in the belief they have no chance. Yes, the $10k bidder ended up paying $10k for the domain, but that was half their max and effectively stopped their competition gradually warming up to that particular name and bidding it all the way to $20k or beyond.

An example:-

goodgenericword.com
Big Player #1 figures other bidders will start cautiously, and puts in $10k sealed bid.
Big Player #1 guessed right, as second highest bid (Big Player #2) was $2.5k.
Domain goes to phase 2, but Big Player #2 doesn't bother to bid as they think "if Big Player #1 started at $10k they must want the name SO bad it won't be worth it - I'll save my funds for a different name"
Big Player #1 gets the name at $10k.

 

[christopher_c]

Less, no way I'm putting my max proxy in on all domains.

 

[GeorgeK]

Yep, as discussed on another forum, there are reasons why the standard English auction yields the maximum theoretical price (i.e. namely the valuation of the second highest auction participant). This new system will raise participation costs (i.e. the aggravation of the extra step, more jumping through hops), and can only be successful if participants are irrational.

Personally, it's insulting for Pool to be expecting that the mass of their client base is so irrational, but perhaps I'm in the minority. Wouldn't be the first time. I won't be following the lemmings over the cliff, but will simply bid lower, as is entirely rational.

 

[internext]

... no way I'm putting my max proxy in on all domains.

But if you dont put in a high bid on a good name you wont make it to phase 2..

Not to mention Phase 1 is NOT proxy bidding. HIGHEST bid sets the ENTRY point for the Phase 2 auction!

I hope this new system fails miserably... but I doubt it. The only thing this does is stacks the deck in Pool's favor, and assures them of more money, less bidders.. IMO.

 

[Whois-Search]

"Auctions are one of the oldest form of markets, dating back to at least 500 BC"

innovating or just plain greedy ?

soon their auctions will be as empty as their marketplace

 

[Edwin]

It may also ensure that nobody outside the 20% of top bidders gets ANY price information, thus putting paid to people bidding low on generics just to keep an eye on what price the domain closes at. I didn't see anything in the FAQ suggesting that Pool had to publicize either the winning Sealed Bid or the Final Bid in any way so perhaps if you lose a Sealed Bid you simply get a "sorry, you're out of the auction" message without learning what the Sealed Bid that won was set at.

If my guess is correct, it also means they can sell domains at any price they like since who can ever prove there are multiple bidders in Phase 2...

 

[internext]

soon their auctions will be as empty as their marketplace

I hope you are right, but as long as they keep catching good names, there will be people willing to play by their rules.

 

[Edwin]

I'm guessing some smart PhDs at Pool have been reading research papers. It seems that a tweaked sealed bid model can yield as much as an "English auction" model.

In fact, except for the fact that Pool goes Sealed->English, their new system sounds exactly like the one theorised in http://www.wiwi.hu-berlin.de/wt1/papers/2000/sealed_bid_auction.pdf

The new system also basically eliminates shill bidding, which is an issue raised in many research papers as being a fundamental flaw of English auctions.

 

[internext]

As to eliminating shill bidding.. the auction process was and still is a private auction with Pool being the seller. There never was any motivation for other bidders to bid up the auction on Pool's behalf. People are only bidding if they want the name Pool is selling. Unless you are suggesting Pool itself conducts shill bidding, which I doubt...

 

[Edwin]

My assumption re. shilling was that they will fairly quickly extend the model to the Marketplace sales, if they see it working for drops.

 

[GeorgeK]

That's a nice reference, Edwin. I'd still be far more comfortable with the English auction, though. The cases where the 2-stage auction are used are much more specialized (e.g. when there are only really a handful, like 3 or 4, bidders, like in mergers and acquisitions).

Even with that paper's the theoretical maximum, the result is "as high" (but not better) than an English auction, so Pool would not be better off switching, and could well be worse off.