[Home] Q: What is an honest Penny Auction?

A: An honest Penny Auction is a strategy game where multiple users compete to win an item like an iPad. A clock is always counting down to zero. If the clock reaches zero, then the game is over and the last player to have Bid wins. Winning means you get an opportunity to buy an item for a very cheap price.

Whenever the clock has time left, any user can pay the website $0.50 to place a bid by clicking "Bid Now". When they do this, 3 things happen. First, the time remaining on the clock increases to 15 seconds (and continues to count down from there). Second, the price of the item increases by $0.02 (the price starts at $0.00). And, third, the bidder has a chance to become the winner if the time runs out.

In the left most picture above, users are competing to win an Apple MacBook Air laptop. Kevin is the last bidder. There are 13 seconds remaining on the clock (and it is counting down). The current price for the laptop is $6.22. If no users place a bid in the next 13 seconds, then the clock will count down to zero and Kevin will win the opportunity to buy the laptop for $6.22!

Q: What is a dishonest Penny Auction?

A: Users participate in honest Penny Auctions because they trust one user can win and receive an item for a great price. A dishonest Penny Auction is one where users pay money to bid but no user receives a prize. One way for a website to accomplish this is to create fake bidders. The computer software that controls the website can place a bid using a fake bidder whenever the auction clock is about to run out and a real user would otherwise win. Eventually the real users give up. The fake bidder wins the auction and the website doesn't need to award a prize.