Kiasu-ism Causes Overbidding On Auctions | Ramblings of an e-trader

Friday, 26 September 2008

Kiasu-ism Causes Overbidding On Auctions

I read with amusement that scientists did a study recently on why people overbid on junk on eBay. It's because of the fear of losing. Why does this require scientists? I mean, everyone who has experienced intense bidding war on a lively auction market place like eBay would know adrenaline rush that top bidders feel.

I know that I could easily be driven to outbid my competitors but when I was new to the game, my friend, already an old hand, advised that I should set a limit for each item that I intend to bid on. Of course, this is the price that we must set way before the closing of an auction, while our mind could still think rationally! Once the war starts, everyone would be hitting the bid button and would not even have time to think.

I have followed what my friend taught me and I would say that I hardly overpay for my auction wins. That's because once an item goes beyond what I am willing to pay, I let it go. You know, the wonder of an international auction marketplace the magnitude of eBay is that there will always be somebody who will come out with a better, much improved and cheaper item than the one you did not win.

For those people who won an item and then later realized that he or she has paid too much for "junk", that's when they justify it with a negative feedback, or chargeback, or both.

3 comments:

Anonymous said...

Ever heard of Game Theory my dear?
It is used to study auctions. Of course you need scientists to tell you that kiasu-ism makes you overbid. There are statistical tests to be done, to confirm that 'everyone' is not an outlying case.

CyberPartyGal said...

Thanks for your input. 'Everyone' is entitled to his own opinion.

Anonymous said...

game theory is a very broad topic man... game theory can be used to design auction scenarios yes. but emily was specifically referring to the Ebay bidding process. It is a very straightforward bidding style auction and nowhere near as complicated as say, auctioning off the wimax spectrum. I think her point is that its good practice to keep things simple, use common sense when we can, and i totally agree.

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