&gt; You could have simply bid 1.25 or whatever your true reserve is in the first place. If your reserve price changes in the face of the current auction price you&#x27;re not acting rationally.<p>Well, sure, the rational choice model is a poor model for human behavior in general that is only even a reasonable approximation when aggregating over large groups, and even then only in certain kinds of interactions. People not acting rationally isn&#x27;t some kind of exceptional failure mode, its the norm.<p>In relevant particular, the rationality assumes -- falsely -- perfect, zero-cost knowledge of utilities and opportunity costs. In reality, understanding of the expected utility and opportunity cost of a transaction is always imperfect, and the degree to which it approximates perfection is dependent, to a certain extent, on the effort expended in considering the utilities and costs, which has its own opportunity cost.<p>If you modify the rational choice model only enough to accommodate the fact that certainty of costs and utilities in the real world is dependent on effort which itself has an opportunity cost it then becomes easy to see how it is as rational as it is practical to be to <i>revise</i> ones estimate of value of a potential purchase in light of information that indicates that the safe (and cheap) estimate used in preparing a bid is not enough to secure a purchase, so further consideration is needed to determine if it is worth upping that bid or whether the purchase should be abandoned.