I got a question about this last night, so wanted to explain it here too in case anyone else was wondering.

When an item is up for bid, you can do one of two things. You can put in the next minimum bid amount to make yourself the current highest bidder, or, you can enter a proxy bid.

Proxy bidding is automatically enabled for you when you enter the highest amount over the minimum bid amount that you are willing to pay for the item. As bids are entered by other people, the system will bid for you by proxy up to your maximum amount. The system will only bid the minimum amount necessary to keep you the highest bidder until your max has been reached.

This can get confusing because it happens really fast: if a proxy is in place, its amount is secret and you won't know it; you'll put a bid in, and all of a sudden you'll be outbid, and you'll wonder what the heck just happened. What happened was that the system made a proxy bid on behalf of the first bidder.

A similarly confusing issue came up last night. One bidder had put in a proxy bid of (for example) 20.00, when the current high bid was still at 14.00, and the default bid increment was only 1.50. Had a proxy not been in place, the new minimum bid amount would have only been 15.50. But another bidder then put in a proxy bid of 20.01. The system bid for each person, and the last bidder of $20.01 was left the highest bidder, with 20.01 the last bid amount. That can be confusing if you think the system should have only left you the highest bidder at 15.50.

So when this happens (you put in a proxy bid and the system suddenly jumps very close to your max amount and leaves you the highest bidder), it's because a previous proxy bid was in place, a bid with which you competed and won. This is not a glitch; it's how things are supposed to work!

If I've managed to confuse you more by saying all this, don't worry--just ask here and (hopefully) I'll explain it again better.