If one bidder spent more than $3500 in bids for that tablet, it's either a shill account or a credit card scammer. Neither one is particularly surprising with sites like this.
Exactly right. Most of these sites have automated scripts that keep the bidding going until the item has received enough paid bids to be profitable before they allow the auction to end. Many others don't actually deliver anything at all - the script ensures that all items eventually go to shill accounts, and all revenue from bids goes straight to the bottom line. I know of one such site that sold for more than $35K on Flippa.
I wouldn't mention the site publicly, and it wouldn't do much good anyway because there are literally hundreds of them that do this. There was a template floating around several blackhat marketing forums for a while with this functionality built in (the Flippa site I mentioned was based on this template).
I'll give you a whitelist instead of a blacklist. Unless you're seeing expensive, national ad campaigns from a given penny auction site and they are based in the US, more likely than not, there are no actual goods to be won. Even then, many use shill accounts to keep the bidding going until the item has reached the desired profitability from real, paid bids.
He's bidding penny by penny, so once he's at $180 (the cost of the tablet) he's not getting them back. So he might be thinking "OK, it's more expensive that in a shop but the $180 being lost already I might as well put one more penny. Then one more. Then one more." etc.
Basically, many people prefer to make a bad deal, or take an otherwise bad decision than recognizing that they just wasted money for nothing.
That's not obviously the sunk cost fallacy. The $180 is gone, the only relevant question is "how much more do I have to put in before I win?"
If you think that amount is more than $180 and you continue to play, because you've already spent $180, that's the sunk cost fallacy.
If you think that amount is less than $180, continuing to play is (to a first approximation) the correct decision. You can either get a tablet for less than $180 here, or for $180 in a shop; also, you've just burned $180. If you were to stop playing, in order to avoid committing the sunk cost fallacy, that would be the sunk cost fallacy fallacy.
It seems likely to me that the mistake being made, after spending $180, is the same mistake that causes people to start playing in the first place. (I couldn't say precisely what mistake that is.)
You're right, except in the case that someone who has spent >$180 in bids so far might actually realize what a horrible scam this is, and might see that it would be irrational for a person to start bidding at this point, and yet chose to go on because they've already spent $180 and want to at least get something in return for it.
In this case, the sunk cost fallacy is what would drive them to keep going, even once they've realized what a terrible trap this "auction" is.
There's a lot more to these sites than this article goes into. I'll say right up front; these sites are total scams who target poor people who usually have a poor understanding of economics, statistics and math.
One of the features of these sites is that they will put up credits on the site as an item for bid. So the person who spent "$3500" bidding might have won a "10,000 site credit" auction at some point for $190.00 "winning bid" where a bunch of people actually spent "$50,000" on it. Which in turn might have had some site credits involved, etc.
These sites have been around for a while now and the fact that they've never been regulated is a great sign of how dysfunctional our government is and its inability to protect poor people from being ripped off.
Conversely it shows that we need to protect ourselves and not depend on a government to keep us safe... And no matter how many laws are made, scammers will always be 1 step ahead.
It is in our best interest to keep as many people safe as is possible. Society as a whole is better when there isn't an underclass perpetually exploited and predated on by others.
I could also be argued that education is the best way to keep them safe. Unfortunatly, most people (myself included) don't like to hear that what they are doing is retarded.
You should sometime in your life learn "If it's too good to be true, it probably is".
See a $180 tablet for $18? Assume it is a massive scam. Only after a TON of googling and talking to people should you even consider it, but even then, it is too good to be possible and you should just skip it. Either save the $180 to buy the real thing, or don't have one.
So many scams are not possible of the end user is not greedy. Nigerian Prince, etc. etc.
Darwinian evolution only explains the propagation or elimination of random genetic mutations via sexual reproduction.
It does not explain economic/memetic evolution. Ideas can be created by one person working alone, or millions working in concert, even asynchronously, where someone might synthesize a line from the epic of Gilgamesh with a line by an 18th century poet, a drawing from a 19th century industrialist, and an article by a 20th century biologist, to create something useful to a 21st century customer.
As humans now employ that mode of development, we do not need to produce offspring to test the fitness of a new strategy. It is actually in our best interest to throw every conceivable idea at the wall to see what sticks, yet still preserve every failed idea on the off chance that it could be made to work under different circumstances.
We use specialist economics now. Every person, no matter how fit, can still advance human society as a whole by exclusively doing the one thing they are best at, and trading for everything else. The only limiting factor is the cost of keeping a human body healthy enough to perform useful labor. Because of that, the endpoint of specialist economics is single-purpose machines performing all labor, and humans inventing new labors for the machines to perform.
Stephen Hawking is fit enough by genetic evolutionary standards to have three children. But by memetic evolution, he has thousands of students that have read his work, and millions who know just a bit more about the universe--and black holes in particular--as a result of it. Without the support assistance of human civilization, he would have died long ago. It was in our best interest to hook him up to whatever machines were necessary to let him do the one thing that he could still do best: think.
Therefore, there are no unfit organisms to be culled in a civilization of generalists who may reprogram themselves into specialists. Every living human can dream up something new and unique that can be done. But our knowledge and creative capacity is finite. Every moment of effort spent solving and re-solving the problems of human necessities cannot also be spent dreaming up ideas not immediately relevant to survival or happiness and researching them into reality.
If we had more people allowed to dream and do, instead of pressing their faces to the grindstone, we would have more impossible dreams coming true. And some of those dreams will coincidentally benefit the Darwinian fitness of all Earth species, because they will become multiplanetary species.
This is why Social Darwinism is crap. We have not only horizontal meme transfer, but vertical as well, from written records. Every new idea may be combined with any, all, or none of the old ideas. This creates a combinatorial explosion of possibilities, where the unfit ideas must be culled, not the unfit thinkers. This means that it is in society's best interest to debunk lies, unravel obfuscations, and aggressively destroy deceptions as early as they may be detected, lest they become an immortal influence on all ideas that will follow.
In this way, the device doesn't even have to exist.
What you're really doing, then, is creating a simulated auction viewing experience which participants can watch or participate in. If a real person actually ends up buying something, you just go out and purchase it on Amazon and ship it to them.
Amazing that this isn't considered a scam by the authorities.
> Amazing that this isn't considered a scam by the authorities.
Enforcement in this area is largely complaint driven, and the target market for these sites is, I gather, generally not the most aware of their rights and likely to complain.
And, the sites may have favorable internal dispute resolution processes that assure that the kind of people that would complain are kept happy, so that complaints to government authorities don't happen.
It's still a valid article to analyze the site and point out that even if everything they're showing is true, it's still a scam. Since the best possible case is still "stay the heck away from these things", it can only get worse from there once you start mixing in outright fraud.
True, however, it does give an indication of potential losses (even if it's an order of magnitude smaller), compared to just going out and buying the thing :-/