Andrew
What you say is true for two people who each bid the maximum they are prepared to pay.
However there is a perception that you can affect whether or not someone bids more by not bidding at all until it is too late for them to “bid more.”
I don’t know if the perception is justified but the theory is that before anyone bids on E bay, it shows the current bid at £0.00. If you "show an interest" in an E Bay item by bidding, thus making the current bid more than £0.00 that you are then attracting a bidding war.
Colin