Dr. Kimbrough of the economics department looks into the cause of over-bidding during online auctions
The science of bidding wars was the subject of an independent study conducted by Dr. Erik Kimbrough of SFU’s department of economics in conjunction with Dr. J. Phillip Reiss of Maastricht University in the Netherlands, particularly at auctions run by eBay. The subjects used were students of Maastricht University, mostly German and Dutch.
The drive behind the study was to investigate the phenomenon of over-bidding during online auctions, and was inspired by another paper published in 2011. Speaking on the paper, called “The Bidder’s Curse”, published in The American Economic Association Review, Dr. Kimbrough said, “They document the empirical facts, they have some models, but we weren’t 100 per cent compelled and wanted to see if we could use the lab to elaborate a little further.” And the data collected presented some very interesting results. Commenting on the unexpected data, he said, “This was a case where we accidentally got interesting data.”
The study was a two-stage, eBay style auction, where subjects bid on an item in the first round. This item has a fixed, “buy now” price. After this they were made aware of the highest bids and allowed a second bid. A “spiteful bidder” was seen as one who raised their initial bid, not to win the auctioned item, but to simply make someone else pay more than they would. A “non-spiteful” bidder was one who did not change their initial bid. The study also showed that most people were either spiteful or non-spiteful, with only a small portion of subjects between the two extremes.
The results were so interesting, in fact, that the study has sparked debate about human nature, in particular, whether or not we are naturally inclined to be spiteful to one another. These results show a clear distinction between “yes” and “no;” some people are spiteful when given the opportunity, and some are not. This study was carried out in anonymity, so there was no risk of revenge or retribution from any aggrieved parties. Subjects were free to do as they pleased when it came to the bidding. “We hope that we’re measuring something that’s consistent about these people over time . . . that some guys are spiteful types and some are not spiteful types,” said Kimbrough
The reasoning behind each individual’s personal decision is unclear, and a psychiatric/psychological study is more suited to clarify that aspect of the study. Dr. Kimbrough did touch on the psychology and the motivation behind the spiteful act in the study, having spoken to a professor of psychology, but no concrete conclusions have been made. However this has prompted him to refine any future studies and, in his own words, “laser in on spitefulness, [and] make sure that’s the only thing that we’re focusing on.” Raising more possibilities is the idea of using different subject groups — such as students from different parts of the world, or subjects of a different age range — in studies. Cultural, socio-economic and personal factors may contribute to the level of spite in individuals and communities. So next time you bid on eBay, think about which side you’re on.
