Featured Research

from universities, journals, and other organizations

Time pressure enhances thrill of auctions

Date:
January 3, 2013
Source:
Karlsruhe Institute of Technology
Summary:
Shopping is more than the rational exchange of goods against money. Emotions, however, do not only play a role when buying a red sports car or the fiftieth pair of shoes. At the stock exchange or during auctions, bidders also are often influenced by irrational motives.

Shopping is more than the rational exchange of goods against money. Emotions, however, do not only play a role when buying a red sports car or the fiftieth pair of shoes. At the stock exchange or during auctions, bidders also are often influenced by irrational motives. In the current issue of the International Journal of Electronic Commerce, KIT scientists point out that the end price of auctions depends on the framework conditions and the emotional pressure of the bidders.

The study with more than 90 test persons simulated the so-called Dutch auction that is usually 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 Karlsruhe Institute of Technology. Adam and his colleagues, Dr. Jan Krδmer and Professor Christof Weinhardt, found that a rapidly falling price leads to a lower end price and to a higher excitement of the bidders.

Excitement is reflected by the measured heart rates and skin resistances of the participants. "Our experimental setup closes the gap in observation," says Adam. So far, the brain areas responsible for emotions have been examined using magnetic resonance tomographs, while the test persons bade against an electronic counterpart. Or participants in multi-person simulations have reported about their subjective feelings after the auction. Thanks to modern measurement technology, it is now possible to measure highly resolved physiological data of many participants during an auction. "Measurements in a multi-person situation significantly increase accuracy and are much closer to reality," Weinhardt summarizes the added value of the new method.

After calibration, the pulse frequencies and skin resistances measured allow rather accurate conclusions to be drawn with respect to the excitement. In addition, it is possible to verify hypotheses other than quicker auctions leading to lower end prices and enhanced 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 may 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 that are not simply used to obtain a good required, 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. "In the academic world, by contrast, economic models were based for a very long time on the purely rational human being, the homo oeconomicus. Our study reveals that emotions also play an important role."

The study is based on a series of auctions among six test persons. Soon a new experimental laboratory for the interaction of up to 40 participants and simultaneous high-resolution measurement of the heart rate, skin resistance, and other physiological parameters will be established with funding by the German Research Council (DFG). "Then, it will be possible to study larger and more complex scenarios in more detail," says Adam. "Maybe, we will soon be able to study the emotional side of financial markets and other decision-finding processes with many market participants."


Story Source:

The above story is based on materials provided by Karlsruhe Institute of Technology. Note: Materials may be edited for content and length.


Journal Reference:

  1. Marc T. P. Adam, Jan Krδmer, Christof Weinhardt. Excitement Up! Price Down! Measuring Emotions in Dutch Auctions. International Journal of Electronic Commerce, 2012; 17 (2): 7 DOI: 10.2753/JEC1086-4415170201

Cite This Page:

Karlsruhe Institute of Technology. "Time pressure enhances thrill of auctions." ScienceDaily. ScienceDaily, 3 January 2013. <www.sciencedaily.com/releases/2013/01/130103131120.htm>.
Karlsruhe Institute of Technology. (2013, January 3). Time pressure enhances thrill of auctions. ScienceDaily. Retrieved April 23, 2014 from www.sciencedaily.com/releases/2013/01/130103131120.htm
Karlsruhe Institute of Technology. "Time pressure enhances thrill of auctions." ScienceDaily. www.sciencedaily.com/releases/2013/01/130103131120.htm (accessed April 23, 2014).

Share This



More Mind & Brain News

Wednesday, April 23, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Study Says Most Crime Not Linked To Mental Illness

Study Says Most Crime Not Linked To Mental Illness

Newsy (Apr. 22, 2014) — A new study finds most crimes committed by people with mental illness are not caused by symptoms of their illness or disorder. Video provided by Newsy
Powered by NewsLook.com
How Smaller Plates And Cutlery Could Make You Feel Fuller

How Smaller Plates And Cutlery Could Make You Feel Fuller

Newsy (Apr. 22, 2014) — NBC's "Today" conducted an experiment to see if changing the size of plates and utensils affects the amount individuals eat. Video provided by Newsy
Powered by NewsLook.com
Do We Get Nicer With Age?

Do We Get Nicer With Age?

Newsy (Apr. 22, 2014) — A recent report claims personality can change over time as we age, and usually that means becoming nicer and more emotionally stable. Video provided by Newsy
Powered by NewsLook.com
How to Master Motherhood With the Best Work/Life Balance

How to Master Motherhood With the Best Work/Life Balance

TheStreet (Apr. 22, 2014) — In the U.S., there are more than 11 million couples trying to conceive at any given time. From helping celebrity moms like Bethanny Frankel to ordinary soon-to-be-moms, TV personality and parenting expert, Rosie Pope, gives you the inside scoop on mastering motherhood. London-born entrepreneur Pope is the creative force behind Rosie Pope Maternity and MomPrep. She explains why being an entrepreneur offers the best life balance for her and tips for all types of moms. Video provided by TheStreet
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
 
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:  

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:  

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile iPhone Android Web
Follow Facebook Twitter Google+
Subscribe RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins