Journal of Marketing Behavior > Vol 4 > Issue 1

The Rational Irrationality of Auction Fever: Evidence from Amazon.com Gift Cards, Consumer Products on eBay, and the Behavioral Laboratory

Matthew W. McCarter, University of Texas, San Antonio and Chapman University, USA, matthew.mccarter@utsa.edu. Abel M. Winn, Chapman University, USA, winn@chapman.edu
 
Suggested Citation
Matthew W. McCarter and Abel M. Winn (2019), "The Rational Irrationality of Auction Fever: Evidence from Amazon.com Gift Cards, Consumer Products on eBay, and the Behavioral Laboratory", Journal of Marketing Behavior: Vol. 4: No. 1, pp 57-101. http://dx.doi.org/10.1561/107.00000063

Published: 26 Mar 2019
© 2019 M. W. McCarter and A. M. Winn
 
Subjects
Information Systems Economics: Auctions,  Bounded rationality,  Experimental economics
 

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In this article:
Introduction
Theoretical Background
Hypotheses
Overview of the Current Methodology
Study 1: Amazon.com Gift Cards
Study 2: Consumer Products on eBay
Study 3: Laboratory Experiments
General Discussion
References

Abstract

There is a growing body of research in the social sciences on auction fever, an irrational behavior where individuals bid more for an item at auction than it is worth to them. While research in behavioral economics, organizational behavior, and consumer behavior examine different antecedents and mechanisms of auction fever, an understudied area is the impact of financial stakes on the tendency to catch auction fever. The few empirical auction studies that include financial stakes leave a confusion gap to be filled. Navigating the limitations in these previous studies and drawing on political economy's rational irrationality theory, we predict that auction fever will be less likely to occur as the financial stakes of the auction increases. We test this general prediction by replication and triangulating two field studies with an experiment in the behavioral laboratory. We find that people are less likely to catch auction fever when bidding for Amazon.com gift cards, consumer products sold on eBay, and laboratory items as the financial stakes of those items increase. Theoretical and managerial implications about the burgeoning literature about auction fever and competitive decision making are discussed.

DOI:10.1561/107.00000063