You people saying you don't understand are missing the fundamental truth about ebay, which is people get caught up in a bidding war/frenzy.
It becomes less about how much they're paying, and more about the fact that they want to WIN the item, because of course it is WINNING remember.
It's the same with live auctions, the whole point in it is to extract more money than people would normally be willing to pay. If it wasn't, why would they waste their time with an auctioneer calling out and taking the bids manually? Much quicker to just have people submit their highest offer and then see who wins right? Yes. Much quicker, but human nature means doing it the other way gets them more money.