I have to chuckle. Being on top could mean winning the bidding or it could mean getting the right house for the right price.
If it's just a matter of winning the bid, the answer is pretty obvious. If you go to auctions and watch bidders there, most are not ready in their minds to go with the highest price they're willing to offer. So, what happens is the price creeps up and people often make foolish decisions they regret later.
In an auction situation, I always tell my buyers to figure out what the maximum dollar amount is going to be and if the bid gets to $1 over that, they will drop for sure without any doubt. When we have that number, we're ready.
Of course, tactics play a role in the game of bidding. You can shut out a competing bidder by leapfrogging his bid by a larger increment than he is ready psychologically for. Most people have 10% or so maximum bid step. Any raise larger than their bid step will cause them to pause or drop out altogether. If you know your buyer's point of pain, you can suggest how to close out bidding.
If you play poker, you'll recognize the psychology of closing out - it is similar to bluffing. You make the opponent think he can't beat you. Large raises early could be a bluff, or it could be a winning hand.
There is nothing worse than having the opportunity before the auction to "buy it now" and the buyer rejects making an offer at that price, but during the bidding they go way over it. It is disheartening. If that happens, you know they didn't think it through and give you their highest price (point of pain). Live and learn.
Remember, winning the bid isn't everything, especially if the buyer has remorse afterwards. But if you know their point of pain, then winning the bid below their point of pain is also a win for getting the right house at the right price.
Deal me in!