Monday, October 1, 2012

Why we suffer from Auction Fever

Bidding at an auction is exciting and can net you some great bargains.

However when you are in a real live sale room surrounded by fellow buyers and spurred on by the auctioneer, it can be easy to get carried away and bid more than you previously intended.

Even on eBay, alone with your computer, it is easy to fall prey to the same excitement, especially as the auction draws to the final moments and you fear you may be outbid.  

Auction fever is great for sellers but can be disastrous for buyers.

The truth is that when you bid at any type of auction you need to have large amounts of self-control to avoid paying more than you intended for an item.

This is born out by the fact that “buy it now” items on eBay often get lower prices than their auction equivalents and that people sometimes pay more for items in auction rooms than they would from a shop or other type of sale.

Even if the sale item is rare, many buyers find that they pay a much higher price than they intended.

There is a scientific explanation for the phenomenon known as auction fever or auction madness and it is seems it is just part of human nature and nothing to do with sense or caution

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One reason is that auctions are competitive.

There is only one item for sale whereas there are multiple bidders competing for the same object.

As the auction progresses many buyers get caught up in the action and get the urge to win at any cost.

The actual prize may be almost forgotten in the thrill of the contest – you feel that you need to win and you will experience feelings of euphoria and triumph immediately following the sale.

This feeling is as much to do with beating the other bidders as it is with winning your item… and in many cases, this feeling quickly turns to regret once you pay for it.

Another reason for auction fever is that the item on sale is generally the only one of its kind.

This means that once the auction has finished you know that you will have missed out on the chance of ever owning it.

When you see the auction catalogue or find your item on sale from eBay, you make the decision that you want it.

You imagine yourself owning the item or re selling for profit and you invent a whole scenario for yourself and the item.

Psychologists call this the endowment effect and it relates to the over valuing of items we already own.  

Because we have already fantasised about the object, we feel as if we own it already and because it has become precious to us, we feel it is worth more.

Once the auction gets underway, and the item starts slipping away, it is tempting to throw caution to the wind and just pay a little extra….go know you want it!

The other factor that increases auction fever is that auctions increase, what the physcologists call physiologist arousal.

Your heart beat speeds up, you feel clammy and slightly nervous and your adrenaline levels rise.

Your brain is telling you to win at any cost.

 This is a perfect response when playing competitive sport or facing a challenge but it does not encourage you to keep a cool head in an auction.

The skill of successful buying is all about choosing the right item and paying the right price for it.

Knowing how to say no based on common sense decisions rather than emotional response is the only sure-fire way to consistently make money at auctions. 

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