Dave,
Bidding on eBay, and elsewhere for that matter, can be a highly emotional process. When someone places a bid and becomes high bidder, they mentally take ownership of that item. If someone outbids them, it is often taken personally. ("Hey! Someone is trying to take MY item from me!") That person may then make a series of bids, quite often in small increments, to find the "top" bid, and once again be the high bidder by the narrowest of margins. If the item in question is sought by others, then this position will not be held for long. This kind of emotion can drive the prices of an item through the roof, even for common items.
There are two ways to know if you've fallen prey to emotional bidding. If you win, your elation is quickly replaced by buyer's remorse. If you lose, you are secretly relieved.
So how do you avoid this pitfall? Place your maximum bid and stop. Its a proxy bidding system anyway, so you'll only pay the highest increment required over the next highest bid. Also ask yourself, "What is the most I would be willing to pay for this item if I saw it in a store?" That is your maximum bid. And one more tip: never watch the auction close. Check it the next day after it closes. If you're too impatient, find out what time it closes, and check five minutes after that. Not one minute before.
How do I know all this stuff? I've bought and sold many things for many years on eBay, and I've watched the bidding patterns unfold and repeat themselves time after time. I've also been on both sides of emotional bidding, winning and losing. I still do business on eBay, but now without emotion. And best of all, I get to sleep at night.
(My apologies to Steve; I didn't mean to hijack your thread!)[:I]