Our purchases are not always rational. Whether it’s that baby pink dress, the gorgeous pair of red shoes, or the electric blue SUV, your emotions play a big role in purchase decisions. But it’s not just about the five senses—even the thrill that one feel because of time ticking away propels us to buy, reveals a new study. That’s what happens at the stock exchange or during auctions where bidders are often influenced by irrational motives.
In the current issue of the International Journal of Electronic Commerce, scientists from Karlsruhe Institute of Technology [KIT] point out that the end price of auctions depends on the framework conditions and the emotional pressure of people bidding.
The study with more than 90 test persons simulated the so-called Dutch auction used for selling flowers. The item being sold is initially offered at a very high price. This price is lowered in decrements until a bidder accepts the current price. He gets the item at this price and the auction is completed. “The Dutch auction is clearly structured and dynamic at the same time. It represents an excellent research scenario,” explains Dr. Marc Adam of KIT. Adam and his colleagues, Dr. Jan Krämer and Professor Christof Weinhardt, found that a rapidly falling price leads to a lower end price and to a higher excitement of the bidders.
“Our data also show that the bidders, after having reached a certain excitement, try to further enhance their thrill by delaying their bid,” Adam says. Based on the heart frequency and skin conductance, it was also found that winning the auction yields a weaker physiological reaction than going away empty-handed. “In other words: Losing is worse than the good feelings associated with winning.”
The results can also be applied to other types of auctions. Examples are classical auctions, where excitement may lead to the expenses being higher than planned. Or internet auctions, where bidders are not just looking to buy a good, but also offer entertainment and emotions. “Internet auction platforms are highly skilled in enhancing the thrill, entertainment, and excitement by the course of the auction and advertisements,” says Adam.