I agree with most you say Job, and precisely when I figured out those things myself I simply stopped running the $1 starting bid auctions and start them only at the price I´m actually willing to sell at. That being said, there is more to psychology of the sale and figuring the other part helped me properly adjust to new realities. :)
Like you´ve said ´´people are looking for bargain´´, what it means generally they are not buying art to enjoy the artwork but rather themselves! It´s the need to pat yourself on the shoulder thinking how smart you are, how good of an eye you´ve got, how much better you are than others. And the same way as with the low starting... and ending auctions I can provide them with those feelings by letting them ´´bargain hard´´ with me on the price and win. :)
It is even better for me and for them in many ways. For me that since making an offer is a responsible move, they tend to educate themselves better beginning with the artist´s auction record to know precisely what should be considered a bargain here. And for them besides feeling less pressured, more in control, perhaps the fact of ´´outbarganing´´ a knowledgeable man, makes the victory feel even sweeter than snatching something from an unsuspecting loser. And although this does not apply to all of the buyer categories out there, there are plenty of those you can do business with towards mutual benefits.
But of course the market would be tremendously greater should the fakes be taken out the equation, they simply grab way too much money off the table overall. That´s also economics 101. 😞