Psychology plays a huge role in how someone plays the auction house. There is a mental angle to being able to work the system. How you list items, resell items, flip product and advertise your trade items is determined on how you set up your mental processes.
Planning how you present your item and how you manipulate the auction house system determines exactly your sales options. Here are a few types of processes you will find players using:
The Home Run seller posts up auctions at the highest prices they can imagine. Their goal is to get someone who doesn't understand how to do a basic search on the auction house. So they see an item they really want, pay the cost of the item and then never realize that they have overpaid for an item. This many times skews the aggregator websites such as Theunderminejournal.com. Already high priced items end up becoming overpriced items if a gold goblin doesn't research more than one place.
The Grinder seller will continually post and reset auctions as they are undercut. So the auction poster will list 10 of their Bold Inferno Rubies hoping to sell one or two at a time. Rechecking to see if they are undercut, the player will repost undercutting the lowest posted item. The idea is to grind as much profit as possible out of an item. Most players end up falling into this category, especially in the Jewelcrafting and Enchanting professions. Grinding out profits is the base for many players goblin fortunes.
A minimizer will sell their product at the smallest amount to empty as fast as possible. Many times this type of seller will undercut everyone by 50%, figuring that they will pocket their profits quickly with less hassle. This again tends to skew the system, especially with semi automated posters. Auction House players find this type of seller the most annoying. The entire inscription/glyph profession on many servers crashed due to posting of glyphs at just above how much production cost. Causing many players to abandon the profession for other fertile soil.
The clueless seller has no idea how much a product is worth. They do not have or take the time to research how much something is worth. So they will listen to what "a friend" suggested or what rumor says it sold for. Usually they end up holding onto the product and resetting the auction time and time again till a kind soul, or reality explains to them that the price they are asking for makes the item non sellable.
There are other seller psychologies to be used. Even a combination of all of these options can be used, the important part is to identify not only your own patterns. But also identifying your competition to use their strengths and weaknesses against them.