Going, Going, Sold!
I’ll sometimes go on eBay to see if I can get something for a better price than I would if I went into a store—everyday items like tube socks or face wash, and those once every year or so things like headphones.
But it’s not common for me to actually bid on an item and track it for a few days. Nope! I find bidding on items a bit stressful, which is why I mostly use eBay’s “Buy It Now” section. If the price is right, I’ll just click to buy, and move on with my day. The “Buy It Now” price is less stressful to deal with, and it also frequently turns out to be less than what people are paying for the same item in the bidding process. I noticed this the other week while buying headphones on eBay—the “Buy It Now” price was lower than what people were bidding in an auction for the same item. People often get caught up in the frenzy of bidding on auction items, and pay more than they normally would.
Why is that? The BBC has a few scientific explanations:
1) People get “auction fever,” which means it becomes a competitive game that’s part wanting to own an item, and part the need to beat the invisible people who are trying to outbid you. Raise your hand if you’ve ever experienced this, and ended up feeling a little remorseful after you’ve won (Me! I am raising my hand, which is why I like the “Buy It Now” feature).
2) We overvalue things when we perceive them to be rare. This has a lot more to do with bidding on one-of-a-kind items, like a vintage article of clothing, or memorabilia, but we get caught up in the idea this may be the only chance for us to own this one-of-a-kind thing, so we must own it! And then we end up bidding a bunch of money, and it doesn’t help that the people we’re bidding against is also in the same frame of mind as us, which drives up the price even more.
3) The endowment effect: We look at photos of items we want, and then picture the item in our hands, in our homes, sitting on our bookshelf. Since we have an image in our heads of what it’d be like to own the item, we pay as much as possible to make sure that we make our dreams a reality.
So basically, if you’re bidding on something, the best way of doing it is to set a bid ceiling for yourself. The problem is that we tend to ignore these ceilings when we feel like we must have something.
Photo: Wednesday Elf