Swoopo, 'The crack cocaine of auction sites' — Episode 2: It continues to confound

You know how there are those who are really unhappy when people have a good time because whatever they're doing isn't their personal idea of what makes a good time?

Those are the people, alas, who make the laws and run the country.

Anyway.

Swoopo is an online auction site launched in the U.S. last year, with a wonderfully inventive business model which is completely legal, yet annoys the great and the good to no end.

Among its unusual auction formats, the so-called penny auction, where it costs 60 cents to make a bid one cent higher than the previous one, is the focus of the greatest controversy.

I wrote about it in a July 13, 2009 post.

The objection of those who would tell us how to live, basically, is that people who bid on Swoopo for the most part waste their money, with Swoopo making huge profits and the auction winner getting a great deal.

But I digress.

In today's New York Times Business section Richard H. Thaler, professor of economics and behavioral science at the Booth School of Business at the University of Chicago, takes a close look at Swoopo.

He wrote, "How much danger does Swoopo pose to consumers? Your view of that may depend partly on whether you think people are playing for fun or merchandise. If they are looking for the thrill of chance, it’s hard to argue that Swoopo.com doesn’t have as much right to life as slot machines or state lotteries."

"But if people are looking for a good deal, the right comparison isn’t to gambling, but to a discount retailer. The difference between Swoopo and Best Buy is that at Swoopo you end up paying for stuff in the other guy’s shopping cart."

"It's no surprise that Swoopo has attracted controversy." Bloggers have called it 'evil,' but the company says that its winners save substantially since the winning bids are always well below the retail price of the product and that everyone else gets an exciting experience, which is worth the price of admission."

Since it's completely voluntary and it's a person's own money they're spending, why the baggies in a twist?

Because, because, because... it's stupid to bid since you have to pay each time you bid — admittedly, only one penny — whether or not you ultimately win the auction.

Last I looked, stupid wasn't illegal — if it were, this blog would've shut down on day one.