Being a long time Ebay watcher, a sometimes buyer, and a budding graduate student in psychology, I have noticed that people behave irrationally when bidding for items at times.  I theorize this is not unlike the gambler who gets on a losing streak and ends up wagering the house or kids.  I call this 'mad bidding' and the perpretators I call 'Mad Bidders'.  "The next one will turn me around!" they think.  As with gambling:  wrong.

For all of its plusses and minuses, Ebay is in fact an auction, just like what you can go to on saturdays if you watch the local paper.  You get to find stuff not in mainstream stores and instead of paying whatever is on a sticker, you get to 'set your own' price.  But where it starts to differ from a 'Priceline' scenario (yeah, the online airline ticket and hotel room sellers with Capt. James T. Kirk as the picthman) is you have competition from people who also want it.

Mad Bidding occurs when otherwise rational people who would recognize a bargain, turn it into a disaster when the competition checks in.  If you read most hints about bidding you always see verbage instructing the bidder the "set a maximum amount you are willing to pay", yet for all of the repetition and common sense, this tip gets tossed out with the trash.

Is the term 'mad' used to indicate insanity or rage?  I think that it starts out as anger and melds into a small slice of insanity.  Consider:  you find an item you would love to have.  The starting bid is very low.  You figure on a low maximum price and enter it.  Maybe you even consider the shipping costs into your bid.  You are winning the auction up unitl the end then you get the 'you have been outbid....' email.  Knowing full well that 'mad bidding' is a very real effect, and learning real well how marketing works, that dreaded email has all sorts of helpful links to place another bid and wording such as "don't let this get away!" as if your world will end.  People don't like defeat and the price of avoidance gets rationalized away as being 'just a few dollars more....'.  We are ingrained to win win win, and the cost is just a few dollars more right?

This presents a nice contradiction no?  The same entity that warns you not to bid too high also entices you.  Not a whole lot different from a casino that lists the gambling addiction hotline on the outside, and the progressive slots jackpots everywhere on the inside.

That said, you know the behaviour exists, and you know you have done it or strongly considered doing it.  So once again, lets proceed rationally and form a checklist:

1) Know the value of the item.  If the item is in the store for $10+tax, then a bid of say $5+$5 shipping is a wash.  Anymore and you have wasted money.  Period.  I suggest that if you must waste this money, waste it buy sending it to me.  I promise to spend it on useful items like boats and gas.  I know there are strategies like bid early to your max and wait, or 'poach' the item with 5 seconds left to your max - the method is irrlelevant.  The 'MAX' is not!

2) Consider shipping costs!  As you might realize, shipping costs are often used to artificially increase the profit of an item.  How many bad feedbacks contain verbage that goes:  "Shipping label said $10, but I paid $30" and the seller retaliates with:  "$20 is used to cover my handling".  Nice work if you can get it.  I buy (or attempt to buy) vintage stereos.  They are worth $75 tops usually if I had in mind to resell them.  A $75 winning bid plus a $30 shipping costs changes the dynamic.  It is even worse on small inexpensive items.  That $5 shipping is not such a bargain.

3) Look for similar items.  If an item is about to head into 'mad bidding' territory and you are outbid, re-do your search and look for another.  Roll the dice again.  Let this one go.  Case in point: a day ago I was bidding on Pioneer SX-780 Stereo units.  Once you bid on an item, it stays in your 'MyEbay Summary' until it ends.  So I watched the auctions as they ended.  One unit was over $150.  This was alarming to me.  "Clearly they cannot know the true value of this' I thought.  I know that some people have $100+ 'buy it nows' which are insane by my knowledge of the item.  (See my other guide on Pioneer silver faced receivers).  To pay $150 for this you have to be distancing yourself from reality.  Guess what?  The auction ended at $255!!.   $255!!!  These were had BRAND NEW for less than that.  What is really bizarre is 1 hour later I won the same item, same quiality as per description, same quality as per questions asked.. for...(drum roll)...$52.  During that day a couple more ended in the $75 range.  These people bidding $255 I sort of hope were shills for the seller (quite possible) or were getting the unit packed full of illegal drugs or uncut diamonds. (Im kidding, no condoning of illegal behaviour.)  In a perfect world a team of research scientists would have had these bidders hooked up to all sorts of machines to study just what exactly goes haywire when people behave like that.

4) Really want it.  If you are about to pay too much, and you know you are about to pay too much...then really want the item.  It is ok to occasionally do an emotional buy - perhaps you had one of these as a kid and it was eaten by the neighbors cat.  I do this sometimes.  I bought a early 1970s HO scale train locomotive simply because of the uniqueness and rarity of surviving examples.  But if I did this on a regular basis I would be living in a cardboard box with my rare trains.

5) Think.  This game is rigged just like any casino.  Or at least assume it is.  The pretty colors and wording of the pages and dreaded emails are designed to get you to part with more cash.  And why shouldn't they be?  The system uses final value fees to exist.  The sellers descriptions are often worded so blatantly false that if they were a brick and mortar business the FTC would have them all in jail.  Auctions are a commercial loophole that lets sellers skirt common sense and trade law - this goes for physical or online auctions.  Unfortunately, they also let people skirt rationality.  Don't be a mad bidder.

As a player in a 'Saturday Night Live' skit once said:  "I want gold for garbage!".  As a bidder, you are the guy parting with the gold.