Psychology experts have long studied how the effects of direct competition have affected consumer behaviour. Auctions have always provided fertile ground to study such behaviour. A prevalent forum for selling goods for centuries, auctions showcase human decision-making in high-stakes scenarios. They also reveal the influence of social dynamics and emotional responses on purchasing decisions.
However, with the emergence and widespread adoption of online auctions, a new dimension to this phenomenon has emerged. As such, psychology experts are actively re-examining the subject, taking into account the new elements of anonymity, virtual interaction, and asynchronous bidding inherent to digital auctions.
Online vs. In-Person Auctions
When compared with in-person auctions, online auctions create different environments that affect how people bid. When attending a live auction, bidders are physically present, which adds a pronounced social and competitive element. You can see other bidders, feel the tension in the room, and sometimes even get caught up in the excitement. This can lead to impulsive bidding and higher final selling prices, as the atmosphere of immediacy encourages people to act quickly and competitively.
On the other hand, online auctions remove the physical presence, creating a more detached environment. This can lead to more calculated and less emotional bidding. Bidders can take their time, research items, and carefully decide how much they are willing to spend. However, this also means that online bidders might not feel the same urgency or competitive pressure as they would in a live setting.
DealDash and eBay are currently two of the most popular online auction platforms, but they have very different bidding structures that influence how people behave.
DealDash’s Auction System
DealDash operates on a ‘pay-to-bid’ model, meaning participants must buy the right to bid before they can place offers on items. Each bid raises the item’s price by a small increment, and the auction continues until no more bids are placed, at which point the highest bidder wins the item at the final price.
This model creates a unique set of behaviors:
First, since each bid costs money, bidders on DealDash tend to be more invested in their decisions. They may carefully consider each bid, trying their best to get the most value for their money. This can lead to strategic bidding where participants only place bids when they are confident about winning.
Beyond that, the incremental price increases can lead to bidding wars where participants are motivated to keep bidding to avoid losing out on their investment. This can sometimes result in higher final prices, but it can also make the experience more engaging and potentially rewarding for those who win.
Additionally, DealDash auctions are often time-sensitive, which can create a sense of urgency and encourage quicker decision-making. This pressure can affect how bidders behave, making them more likely to place last-minute bids to secure a win.
eBay’s Auction System
eBay, on the other hand, uses a traditional bidding model where bidders place offers without paying per bid. The highest bidder wins the item, and the auction ends when no more bids are placed within a specific time frame.
This system encourages slightly different behaviors:
For one thing, eBay allows bidders to set maximum bids in advance, which the system uses to automatically increase the bid incrementally—but only if someone else makes a higher bid. This can lead to more passive bidding where participants set their limits and let the automated system manage the rest.
And because there is no cost per bid, eBay users may bid more freely and frequently, often using so-called ‘sniping’ strategies (bidding in the final seconds) to win auctions. This can lead to more competitive and sometimes unpredictable outcomes.
With no direct cost for each bid, eBay bidders might be less emotionally invested in each offer. This can make bidding more strategic but, at the same time, less engaging compared to DealDash’s pay-to-bid approach. Both DealDash and eBay offer distinct auction experiences that cater to consumers of different psychological makeups. While DealDash’s pay-to-bid structure may appeal to those seeking a more interactive and strategic environment, eBay’s model is probably better suited for those who prefer a straightforward and less financially intensive bidding process. The subtle differentiations between the two platforms, and the distinct behaviours they encourage in their users will no doubt be the subject of psychological interest for years to come, as the study of how human beings interact in competitive online consumer environments is still only in its infancy.
