A framework for emotional bidding


According to Ariely and Simonson (2003), online auctions have turned out to be “one of the greatest success stories of web-based services”.

Nowadays almost every user of the Internet did joined an online auction. The best know online auction is eBay, but there are lots of them. Focusing on The Netherlands, the most known auction websites are Vakantieveilingen.nl and Hotelkamerveiling.nl. If you ask your friends or family about their online auctions experience, they will probably have an experience to tell you. Often these stories are based on success or unsuccessful auction biddings, using emotional bidding. Ariely and Simonson (2003) found that 76.8% of the bidders perceive other bidders as “competitors” and refer to auction outcomes as “winning” and “losing.” This feeling about winning and losing is also discussed during class. Losing an auction will often lead to the feeling of wasting your time. Such feelings are part of human’s emotions, and that’s a link to the paper of Adam et all.

The paper of Adam et al is interesting because they are the first that made a framework for emotional bidding.

framework

The results of the literature research is that the economic environment can affect a bidder’s level of perceived competition and thus influence the bidding strategy prior to the auction. This can lead to higher biddings on items with a low face value (as discussed in class on dd. 23-02-2017 (D. Tsekouras, 2017)).

Second, auction events may have ramifications on the bidder’s emotional state during the auction due to previous investments or perceived ownership. If the auctions almost ends, you will not waste your time, so why would you not bid more money?

Third, past auction outcomes may impact future bidding behavior through emotions such as the joy of winning or loser regret. Auction fever, eventually, is a phenomenon that results from the interplay of these emotional processes and causes a bidder to deviate from an initially chosen bidding strategy.

 

The most powerful element of this paper is that the framework built by the researchers represents the prior literature about the theoretical bidding processes. The upper part of the framework represents the prior literature, and the lower part formalizes a participant’s emotional processing during an auction. Using prior literature as fundament of the framework is strong because lots of research is done about auctions. Making a direct relation between emotions and auction events gives this paper the uniqueness.

A weakness of this paper is that, when applying the framework in a neuro- and physio economic experiment, there will probably a lot more correlations between emotions and bidding/auction behavior than just the six propositions made by the researchers of this paper.

Overall this paper adds a lot of new possibilities to the future literature, from testing the framework on diverse online auctions, to diverse experiments the make even more correlations.

 

 

References

Adam, M. T. P., Krämer, J., Jähnig, C., Seifert, S., & Weinhardt, C. (2011). Understanding auction fever: a framework for emotional biddings
Ariely, D., & Simonson, I. (2003). Buying, bidding, playing, or competing? value assessment and decision dynamics in online auctions.
Tsekouras, D. (2017). CCDC 23 feb 2017.

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