I saw that same pattern of behavior for many items today. It is a bit baffling.
I don't know if this is true for liveauctioneers (which I think is based in the USA), but I have noticed that similar sites in the UK can act as aggretators for multiple auction houses. So you can register to bid on the aggregator's site and/or you can register to bid on the specific auctioneer's site. Until the lot goes live, I don't think the different sites know about bids on the other, so the rapid escalation might be users who have submitted max bids on two different sites rapidly bidding against each other. Or more precisely, the bots on those sites bidding on behalf of their users.
That said, I have no special insight into the business model(s) or business relationships in this world.
I've seen that work in both directions. In the example that started this thread, the estimate was $8,230 - $12,350, seriously ridiculous. But I assume the incentive is to go way overboard on those estimates to make the customers feel like they got a deal. After all, the buyer bought this watch for only $6720.
OTOH, I saw an English auction house put an estimate of £120 - £140 for a 1940s Omega that looked to be in very good condition. I couldn't imagine it would go for that low and submitted a max bid of £600. I believe it finally sold for around £1100, and I think that's actually a good price for the watch. (I would have bid that much myself if circumstances had allowed it.)
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