Think it depends on how the buyer paid. If by CC, then they would probably refund and eat the negative balance, because once the customer files chargeback with their CC company Paypal will lose anyway. If paid by balance or echeck, I guess the have algorithm to see if it will refund automatically. How good the buyer account, chances of getting their money from the seller, etc. Then it is spit to a live person to see if they will "eat it" and refund, or will screw them with, "we found in your favor but their are no funds in the sellers account" message.
I am sure paypal tries to minimize their loses as much as possible and will do everything illegal to avoid paying out, if they do not have to,
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