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ChangingMinds Blog! > Blog Archive > 16-Mar-07

 


Friday 16-March-07

Bidding wars

I've always enjoyed auctions and have bought everything from chairs to cars there. It's almost as much fun to go along and watch the casual-frantic poker-faced bidders trying to put off their rivals.

The psychology of auctions is a tricky old business. Not the myths about scratching your nose and buying a Van Gogh, but the way they can draw you in, wind you up and tempt you to pay way over the odds.

When you make a bid, for a short while it seems as if the item is yours. In effect, you have closed on it before you have actually bought it. Someone else putting in a higher bid thus seems like theft, as they steal that ownership baton away. Indignant and affronted, your righteous response is to do the same to them, taking back your possession. And, to make matters worse, this happens in full public view, where the shame and pride of losing or winning is multiplied manifold.

Scarcity is another principle at work in auctions. When things are rare we often want them more and, when there is only one, this principle is multiplied again. When it's one chance, all or nothing, we are seriously tempted to go for it, big-time.

Looking at e-Bay, these principles seem to work well online as well as in the more traditional auction houses. We will thus merrily duel with people we will never meet. Perhaps this is no surprise: just think of the daily and fierce competition on the roads. We are a successfully competitive species and love a good fight, especially if there is little chance of real harm.

And so the bidding war gets driven by psychology more than real value. There is value in over-bidding, but this is usually a transient glow as the winner achieves the satisfaction of final closure and vanquishing the accursed foe. Sadly, this high may well later be followed by the low of repenting at leisure in 'buyer's remorse'.

So. If you love the buzz of the saleroom or the final seconds of a timed, online auction, beware. Step outside yourself before you bid and look objectively at what is going on (particularly in your head). And before you get carried away: think! 


Your Comments


Hi,

That's nice auction analysis. It seems that every kind of business is based upon some kind of psychology trick in background ...

What get my attention though is in the last paragraph - "step outside yourself ...", "... think!". I would like put this inside wider context - our ordinary daily lives.

I just found out, that I'm not thinking at all. When I talk to others, when I work, and so on - everything is 90 % unconsciousness automatic learned behavior. When I do think, I need to be alone, not-disturbed and concentrated. How can I achieve what I thoughtfully prepared before? Have always presented step-by-step written-down guide and check if I follow it or if I deviate it through emotional behavior?

How can one step outside by oneself and consciously think? How can one behave not-emotionally in such emotional environment as auctions are?

-- Ales

Dave replies:
If only more people would step outside themselves and do more conscious thinking! But this takes time, so your subconscious takes over a lot.

Doing subconsciously what your conscious mind wants is often a matter of repetition and learning. Like actors on the stage, after a while the words appear when they are needed.

Doing anything consciously when you are emotionally aroused is difficult and again can be improved with practice. Go to the auction, and try small things, like early bidding when you are unlikely to buy anything. Practice stopping (which is often difficult). Practice stepping outside and looking at yourself.


 Buying at an auction is such a competitive environment that there is little chance to stop and reason. The thinking goes on before the auction when a smart buyer develops a strategy; this can be the outside looking in thinking described above. One such strategy is to be the third bidder in late in the competition. Coming in late has the effect of surprising the two fierce competitors that it can cause them to step down. Doesn't work all the time but when it does it really surprises bidders (perhaps causing them to stop and think) One thing for sure is that you'll find out if any of the bidders are willing to go beyond what the item is actually worth.

-- Bill D
 

Dave replies:
Good rational strategy, Bill, and professional auction-goers will likely have an array of methods they use. The problem as described above is that we're not always rational and many can be provoked into irrational bidding. Keeping your head is a wise first step.


 Hi my name is jessica i have a pair of ballet point shoes signed my patrick Swayze, saying on them love patrick Swayze, in permenit marker in red ,can you tell me what is the best price i can get for them,i also have pictures of him from my camra when he came to winnipeg manitoba him and his wife to make a movie ,my daughter was in the movie him and his wife played.

Dave replies:
Hi Jessica. The shoes may be worth something but the photo is less likely to be valuable. Try looking on somewhere like ebay or specialist collector sites. You may also want to visit a local auctioneer who may know where celebrity memorabilia is sold.


CAUTION TO ALL:
.Having recently attended an auction for foreclosed upon homes, there's little doubt the intention is to keep the uninitiated buyers in a state of confusion by maintaining a war-zone-like atmosphere. The auctioneer is basically unintelligible to all except experienced buyers. The auctioneer is assisted by ten, or so, individuals, who walk the floor, blow whistles to elevate ambient stress levels, blurt out comments; all in the guise of facilitating the process. Their role is to interpret the rantings of the auctioneer for the uninitiated and to subliminally encourage a bid from such uninitiated without their awareness of whom they are bidding against. Once I successfully accomplished my purchase, I received congratulatory slaps on the back and was whisked away to a side area where thirty or so qualifying financial assistants sat at folding tables. Many of them were grimacing as if in actual pain or experiencing an unrelenting migraine. Essentially they were held captive to the rantings of the auctioneer and the unintelligible clamor issuing from the bidding floor. There's little doubt the EPA would consider the work environment toxic to its employees. I heartily recommend serious purchasers experience the bidding floor before committing themselves to an actual purchase.

-- Baruch R


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