Bidding Frenzy: Speed of Competitor Reaction and Willingness to Pay in Auctions

Journal of Consumer Research, Forthcoming

55 Pages Posted: 22 Dec 2018

See all articles by Gerald Häubl

Gerald Häubl

University of Alberta - Department of Marketing, Business Economics & Law

Peter T. L. Popkowski Leszczyc

University of Queensland - Business School

Date Written: December 5, 2018

Abstract

This research examines how the intensity of the dynamic competitive interaction with other bidders in ascending auctions influences consumers’ willingness to pay for auctioned products. It focuses on one important aspect of this interaction – the speed of competitor reaction. The key hypothesis is that having one’s own bids reciprocated by competing bidders more quickly increases one’s WTP in an auction. Evidence from five experiments demonstrates this effect and pinpoints the essential aspects of the psychological mechanism that underlies it. In particular, the effect of speed of competitor reaction on bidding behavior (1) is serially mediated by the perception that the auction is more intensely competitive and by a greater desire to win, (2) is distinct from the effects of time pressure and of the auction’s duration or overall rate of progression, (3) is not driven by inferences about the auctioned product’s market value, (4) is not qualified by the number of competing bidders nor due to any inferences about the latter, and (5) hinges on direct competitive interaction with other human bidders.

Keywords: Auctions, Bidding Behavior, Willingness to Pay, Competition among Consumers, Competitive Dynamics, Speed

JEL Classification: D1, D3, D44, M31

Suggested Citation

Häubl, Gerald and Popkowski Leszczyc, Peter T. L., Bidding Frenzy: Speed of Competitor Reaction and Willingness to Pay in Auctions (December 5, 2018). Journal of Consumer Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3296104

Gerald Häubl

University of Alberta - Department of Marketing, Business Economics & Law ( email )

Edmonton, Alberta T6G 2R6
Canada

Peter T. L. Popkowski Leszczyc (Contact Author)

University of Queensland - Business School ( email )

Brisbane, Queensland 4072
Australia

Register to save articles to
your library

Register

Paper statistics

Downloads
14
Abstract Views
100
PlumX Metrics