"Red background color induces aggression through a feeling of arousal and it increases aggression relative to blue or gray backgrounds. This causes individuals to make higher bids in auctions but lower offers in negotiations," write authors Rajesh Bagchi (Virginia Tech) and Amar Cheema (University of Virginia).

The authors asked consumers to imagine they were purchasing a Nintendo Wii video game console on eBay and then showed them identical products on a white computer screen with either a blue, red, gray, or white banner on the page.

Some consumers were shown a screenshot of an eBay auction and given the option to choose a maximum bid or pay a "buy it now" price of $149.99. Buyers offered higher bids when the screen had a red background.

A second group had the option to pay the "buy it now" price or make just one offer that the seller could either accept or reject. In this case, a red background had the opposite effect of reducing willingness to buy the product and consumers were willing to pay more when the background was blue.

Buyers think they are competing against other bidders in auctions. Therefore, a red background is advantageous to sellers as aggressive bidders will try to win by outbidding other potential buyers and therefore offer higher bids. In negotiations, however, buyers are competing against the seller and will try to get the best deal. In this case, sellers will benefit from a blue background.

"Just as influential as the product itself is its selling mechanism -- auction or negotiation -- which moderates the effect of color on willingness-to-pay," the authors conclude.

Note: If no author is given, the source is cited instead.

• Consumer Behavior
• Perception
• Psychology

• Consumerism
• Privacy Issues
• Industrial Relations

• Microeconomics
• Experimental economics
• Negotiation
• The Long Tail
• Economics
• Game theory