Auctions versus Direct sales part II

A recent article on the BBC addresses an issue that has been of interest to philatelists for over a hundred years. I wrote several weeks ago about auctions versus direct sale. This new article adds to the discussion by referencing several psychological studies. The question that was being addressed was whether people got better deals buying at auction versus direct sale and, if they didn’t, why.
When people bid at auction they seem to get as good, if not better, prices than they would if they bought their stamps directly if they limit their bid to what they believe that the lot is worth. Most importantly, to get the best price do not attend the auction, either in person on on line. It seems that competitive pressures and a feeling that if someone else wants something that you want that it must really be worth having are what compel people to bid more (often far more) than what they were prepared to bid and what the stamps are worth. Limiting your bids and not going in person are good advice for keeping your purchase levels where they should be. From personal experience, Apfelbaum has been one on the largest buyers at other philatelic auctions over the last twenty years. We never go in person and always put in our bids with an agent as we know first hand the temptations to overpaying.
There are at least two cases where going to an auction yourself or bidding on line is imperative. The first case is when you are a dealer and need philatelic material to sell. You need to spend a certain amount to keep your sales going and there are many lots that would work well for you. The issue you need to keep track of in this situation when you bid on line or attend the sale is which lots you are buying (so that you get the mix of countries and area that you want) and that you don’t spend more money than you have available. The second case where you might want to go to an auction is when an item is being sold that you really want  and which you are certain may never be available again. But be careful. I have on the wall of my living room an autograph of Charles Dickens on a Penny Black cover that gives me a mixture of pleasure and pain every time I look at it. Pleasure that I own the unique example of my favorite writer’s autograph on a cover bearing the first postage stamp. And pain when I remember how much more than I wanted to pay that the competition in the auction room forced out of me.
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