Auction houses have devoted extensive resources
toward protecting sellers, but have invested limited effort into
protecting buyers. Why?
$10,000 and felt very strongly
about his loss. His situation and
(negative) feedback for the seller
carried the same weight as someone who lost one dollar in an
auction.
0.8
Dissatisfaction rate (worst-case)
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Post-1900 Books
antiques
Paintings
0.06
Worst-case dissatisfaction rate
Best-case dissatisfaction rate
RESULTS AND ANALYSIS
The results of our preliminary
survey are as follows: We
received 98 responses from the
auction “winners,” 21 of which
either did not receive any item at
all, or did not receive what they
were expecting (mostly because
the item was damaged or otherwise in worse shape than
described). Further, eight out of
98 received absolutely nothing at all, which represents 0.62% minimum (assuming everyone else,
including non-respondents, received something, as
we will discuss). This incidence would be 62 times
higher than official estimates of fraud, and this is
clearly a subset of all fraud.
If either the buyer received nothing or did not
receive what was expected, we call that “swindled”
(recognizing, of course, that the buyer may or may
not have been intentionally swindled and that this is
definitely a superset of purely fraudulent activity).
Still, knowing the incidence of “swindling” is important
because it most certainly is an input into buyers’ perceptions of the fairness of auctions.
We calculate the worst-case rate of negative
response (by dividing the total negatives by total
responses) and the best-case rate (by dividing the total
negatives by total contacted). It depends on how one
views the representativeness of our sample to know
which is more “accurate.” If one feels that the respondents are representative of the population at large,
then the worst-case estimate would be closer. If one
0.05
0.04
0.03
0.02
0.01
Dissatisfaction rate (best-case)
0
Collectible Computers/ Jewelry excl Pottery Event
clocks electronics watches and glass tickets
Metalworking Cameras Major Guitars Sports Watches
equipment and photo appliances memorabilia
Figure 1. Dissatisfaction
rates for different
categories.
feels that our respondents are “disgruntled,” then the
best-case estimate would be closer.
In addition, we have two opposing factors. For
those who are embarrassed about being cheated, they
will be underrepresented. They do not want to report
that they were cheated because it would make them
look foolish. On the other hand, there are people who
were cheated on one auction and are so mad they
want to tell their story, even if we asked them about a
different auction, and that will lead to overestimation.
The true rate would most likely fall somewhere in
between the best- and worst-case estimates.
The percentage of negative responses varied for different categories of auctions (see Figure 1). Computers and electronics had the highest worst-case rate of
negative responses: three-quarters of respondents
either did not receive their computer or it arrived
damaged. In terms of the best-case rates, the worst
category was Jewelry (excluding watches), in which
5% of all auction winners contacted either did not
receive anything at all or did not receive what they
were expecting. Four categories had no negative
responses (Paintings; Guitars; Event Tickets; and
Watches). One surprise was that Jewelry, excluding
watches, had one of the worst rates of dissatisfaction,
while Watches had one of the best. In one category,