Robert, I think your logic is a little flawed. If my max bid is $12, I'm at $9.99, then the next thing I see is someone else has bid and I'm at my max of $12. They know what they bid, and if the proxy was less than one increment. I DON'T know what they bid. They may have bid exactly $11.50.

If your high (proxy) bid is less than 1 full increment higher than your posted high bid, that means you're still high bidder and your max has NOT been met yet. In that case, the other bidder knows nothing except he's been outbid so far.

Your lesson is valid though. Whenever you get bid up to your max without being overbid, you have to assume the other bidder knows you're at max. But you don't know for sure.