There's an interesting front page article today regarding the use that academics are making of on line auctions to verify theories about human behavior. Here's a part of it that relates to sniping eBay auctions and use of Reserves:

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Even with all the interest by researchers, some of the questions posed by the e-commerce sites remain unresolved. One of them involves the usefulness of "sniping," which occurs when a prospective buyer in an auction doesn't get involved in the bidding until the last minute, and then makes an offer the others don't have time to top.

The practice works only on eBay-style auctions, which have fixed time limits. There are many eBay users who swear by the practice. In fact, there are even a number of services that will snipe for you automatically.

David Reiley, a University of Arizona economist, says that for certain kinds of auction items -- including standardized electronic gear with many different bidders -- studies suggest that snipers don't do better than anyone else, either in their success rate in winning their items or in the price they end up paying.

But he says there may be other kinds of merchandise, such as those with fewer bidders or prices that aren't easy to determine, where buyers should, in fact, snipe. Even that could change, he notes, if everyone sniped. It is currently unclear how many people on eBay engage in the practice.

Not all of the work being done online by economists is theoretical, and savvy eBay traders would be wise to acquaint themselves with some of the literature. Lucking Reiley, for instance, along with a colleague, Rama Katkar, wanted to find out if it was better to publicly set a minimum bid for an item or to use an eBay feature called a "secret reserve," which rejects bids below a certain dollar amount without telling bidders what the minimum is.

By comparing 50 pairs of identical items, one with the secret minimum and one without, the economists concluded that the secret minimum dissuaded buyers from participating in the auction, thus driving down prices. The study was done using Pokémon cards, but the finding, presumably, could hold true for anything: Beanie Babies, lawn gnomes, you name it.