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  • Writer's pictureMike Brandly, Auctioneer

Artificially intelligent shill bidding?

Shill bidding is not difficult to find in the auction business. What is “shill bidding?” It’s bidding lacking the genuine intent to purchase — and done to increase prices for others. Here’s more on shill bidding:

So we now see that artificial intelligence can [reportedly] be used to place shill bids:

An AIShillBidding tool intelligently analyses bidding patterns and strategically places higher bids based on recent bids to keep the auction competitive and engaging. It outright responds to participants’ genuine bids and carefully places shill bids against the real bidders to reach the highest possible price for each lot.

I’m not necessarily convinced artificial intelligence (AI) can do this much better than people can. For live and simulcast auctions, the auctioneer can see the other bidders, and gauge body language and other visual hints. Online, it’s a bit more opaque.

While AI can be used for several good endeavors, this is a case of AI being used for nefarious purposes. Much to my dismay, of course, a few auctioneers applauded this announcement and wanted more information regarding it.

As it’s been with disclaiming warranties by claiming “others” are telling the auctioneer, I wonder if now auctioneers will be disclaiming responsibility for shill bidding — in that AI is doing it, and not them? I’m not trying to give auctioneers any ideas …

There is more reason than ever to decide the most you’re willing to pay for that online auction property and stick to it, and even more reason to not disclose your maximum bid to the software. As well, if possible, don’t have any particular bid history for similar items on the same platform or possibly any platform.

Interestingly, a live auction might be the most safe of these options, where you bid for yourself. I don’t see AI having a substantial impact on shill bidding in a live event — yet. However, there is reason to keep your maximum bid to yourself in all cases.

State law across the United States allows auctioneers (and others) to bid for the seller in a “with reserve” auction. Yet, bidders have a right to rescind the deal if such right to bid is not reserved (disclosed.) [§ 2-328 (4).] Unfortunately, this “right to bid for the seller” is often used for shill bidding.

We’ve held that AI can be used for great reasons, and also that AI can produce unreliable information (hallucinations) in addition to being used for harmful endeavors. This “shill-bidding” AI proposal makes me think the downside might be more dangerous than the upside is beneficial.

Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at Mike Brandly, Auctioneer, Brandly Real Estate & Auction, and formerly at Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, and an Instructor at the National Auction Association’s Designation Academy and Western College of Auctioneering. He has served as faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.

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