That kind of rationality is rarely found in a hot market. You'll essentially be driven to massive overbidding due to the highest bid in the group. In a big enough market with enough demand, you can be sure that high bid will be well beyond a rational amount. Fairness has essentially nothing to do with it.

Once you lose 5-10 bids, you'll either give up on owning a home, move to the country or start upping your bid to suit.