While still a relatively new form of auction, penny auctions have quickly gained popularity,
partially due to their fantastic claims that people can save up to 90% o retail prices"1.
The unbelievably low prices displayed for ended auctions on the front pages of many of
these sites seem to indicate that these promises are truthful. However, the displayed prices
and the advertising claims fail to inform potential users that in fact, most of the revenue
generated from the auction is not from the price that the winner pays. Instead, in penny
auctions, bidders pay to increment the price of the item by a small amount and become the
current winner of the auction. Therefore, all but one bidder will lose money on the auction,
and even the winner may not get as good a deal when the cost of her bids are taken into
account. Unsuprisingly, most inexperienced bidders will lose money fairly quickly bidding
in this type of auction. However, even experienced bidders tend not to make more than a
small percentage prot per bid [1]. Our goal is to construct a strategy that realizes at least
a part of the advertised prot for penny auctions.