Surprise: Auction Bidders Not Always Rational
from the zoon-economicon dept
In an attempt to gain a better understanding of human economic behavior, a group of economists studied the buying patterns of eBay auctions. What they found was that humans are not always rational, at least in the econ 101 sense of the word. One of their most surprising realizations was that bidders would often pay a higher price than the “Buy it Now” price, presumably because they got so caught up in the heat of the auction. This is an odd quirk, though its discovery was hardly needed to demonstrate that humans don’t always operate in a purely rational manner. Another thing they discovered was that bidders didn’t pay much attention to shipping prices, and that they’ll typically opt for an item that can be won for less, even when shipping costs eat up any savings. Ultimately, there’s more to auctions than simple price discovery. Not only are they successful because they help arrive at an equilibrium price for goods, but participation in them makes for a fun, game-like experience. Thus, it shouldn’t be a surprise that those involved aren’t always shining examples of homo economicus.