Here is my personal philosophy on AH mistakes:
A. If I buy something that somebody put up for alot less than the going rate, thats they're problem. Alot of the time this is the result of somebody trying to undercut and instantly sell a piece of equipment that others are trying to sell. If you're gonna be retarded and undercut by millions, be prepared to loose millions.
B. If somebody overbids on an Item I have placed on the AH, that again is their problem, but it is only fair that they get their moneys worth. If somebody overbids, and this has happened to me more than once, rather than returning their money, I spend it and send the person the items i spend it on. This sounds more complicated than it is, so i'll give examples of what i've done in the past. Just recently I had a person pay me the carange blade price for a bloody blade, 1 mil for what was at the time a 300k sword, so i took the extra money and bought a stack of darksteel ingots, and a few beastman bloods and crafted 3 more bloody blades and sent them to him (i failed one) so for his money, he got 4 bloody blades, for about the cost of making them, and i got a smithing skill up and a chance to try for an HQ.
I did a similar thing when i was skilling up alchemy, somebody overbid several hundred k on an item i was selling, so i used his money to buy supplies for icarus wings, crafted a couple stacks, got a couple of alchemy levels, and sent him the resulting wings, which turn out to be a profit for him.
My philosophy is that if you overbid, your money becomes mine for a while, I'll give it back, but not until i get alittle use out of it too, consider it dumbass tax.
C. If i overbid on an item (this has also happened). I write the money off, shrug and go on with my day. I don't expect to get it back, and i don't ask for it back usually. If i get it back, i'm very greatful, and usually send back a chunk of the money.
Thats my AH code of ethics.