Think, feel, bid: the impact of environmental conditions on the role of bidders’ cognitive and affective processes in auction bidding

Anuja Hariharan (), Marc Thomas Philipp Adam (), Timm Teubner and Christof Weinhardt
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Anuja Hariharan: Karlsruhe Institute of Technology (KIT)
Marc Thomas Philipp Adam: University of New Castle
Timm Teubner: Karlsruhe Institute of Technology (KIT)
Christof Weinhardt: Karlsruhe Institute of Technology (KIT)

Electronic Markets, 2016, vol. 26, issue 4, No 4, 339-355

Abstract: Abstract Environmental conditions and the interplay of cognitive and affective processes both exert influences on bidding behavior. This paper brings the above together, considering how the (external) auction environment determines the impact of (internal) cognitive and affective processes on bidding behavior, assessed in comparison to the optimal bid. Two aspects of the auction environment were considered, namely auction dynamics (low: first-price sealed-bid auction, high: Dutch auction) and value uncertainty (low, high). In a laboratory experiment, we assess bidders’ cognitive workload and emotional arousal through physiological measurements. We find that higher auction dynamics increase the impact of emotional arousal on bid deviations, but not that of cognitive workload. Higher value uncertainty, conversely, increases the impact of cognitive workload on bid deviations, but not that of emotional arousal. Taken together, the auction environment is a critical factor in understanding the nature of the underlying decision process and its impact on bids.

Keywords: Arousal; Workload; Bidding; Heart rate; EEG (search for similar items in EconPapers)
JEL-codes: D44 D87 L81 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s12525-016-0224-3

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