An auction does not work like buying/selling in the marketplace. Therefore, we want to introduce you the system behind it.

You have to imagine it as follows:

An item is on the market and it currently costs 100 Silver. Player 1 thinks the item would be worth 10.000 Silver - so he give a maximum bid of 10.000 Silver. Shown as highest bid is 101 Silver since no one beside player 1 bidded more until now.

Now player 2 comes along and sees that the item is sold for 101 Silver (at least he thinks so). So, he thinks the item would be worth 500 Silver and bids this amount. Now he gets the error message "you got outbid".

This is no bug and the other user isn't using a bot or anything similar. It is just how the auctions work. This "game" continues until player 2 bids 10001 Silver. At this point, he placed the highest bid and is also shown as highest bidder.

I created an example for you to show you what I mean. I have chosen the following auction:

Placed my first bid:

And got outbid:

Now I placed a higher bid and was the highest bidder: