Well, there's one theory that says that if people see a large number of bids, they think it's a hot item and they get discouraged from bidding--so you should make several small incremental bids so that anybody shopping for the items says, damn, this turkey is SERIOUS about winning the auction, I better not bother bidding. This line of thinking requires that people be kinda dumb, so I dunno, there may be something to it.
Ebay is living proof that one of the basic assumptions of many economic theories, that people behave rationally when making decisions about money, is not necessarily true.
Sometimes I wonder who's worse, clueless sellers or clueless buyers. Take this one for instance:
http://cgi.ebay.com/ws/eBayISAPI.dll...category=28181
Meade dealers are currently selling this exact same telescope new, with the computer hand-controller and a tripod, for $495. Is this seller clueless to put his starting bid at $700? Or is he hoping that some bidder will be clueless?