Perhaps you know that thrill of the consumer chase. The seconds are counting down on the timer, and you're just pennies away from a big win. No, hold it, someone has just outbid you. Quick, if you can just type fast enough you'll sneak in under the wire. Success! You've landed that crockpot you always wanted. And it only cost you... wait... $64.99 plus $7.50 shipping... oh no... you only meant to spend $34.99. And you would have gotten free shipping on Amazon! Two days ago, this was going to be a steal at $19.99. Now you don't even want it at all; it will just serve as an ugly reminder of how easily you fell prey to eBay frenzy.
It might not be a crockpot you ended up with, and maybe it wasn't even through an online auction site. Your consumer faux pas might have been committed at a garage sale as a result of elbowing out a competitor for a one-of-a-kind antique desk lamp that you found out later doesn't even work. But in the heat of the moment, the primitive hunter-gatherer mentality took over and you could no more imagine walking away empty-handed from the fray than leaving your first-born at the mercy of some ancient predator.
Fixation on eBay is one form of compulsive shopping; a means by which people seek relief for anxiety by acquiring unnecessary possessions. Sure, it's possible to land a great deal on eBay. But for people who repeatedly get drawn into its lures, there may be something else going on that they need to examine. Then, of course, there are the financial problems that can ensue. Parodied in the Sophie Kinsella "Shopaholic" novels, overspending can ruin your credit history, put you in severe debt, and threaten your close relationships. So, there is a connection between eBay (and other online spending) and life fulfillment.
What is the psychology behind eBay? Several factors conspire to make overspending an attractive and dangerous game. Columbia University economist William Vickrey received the Nobel Prize for his writings on "auction theory," work that became integrated by later theorists into John Forbes Nash's game theory (Nash also won the Nobel Prize). In eBay types of auctions, people bid more aggressively as the bid values increase. Economists believe this last minute frenzy occurs because bidders become increasingly less fearful that that their bid is overvalued. In other words, when you see others willing to pay more for an item, you begin to think that the item is actually worth more and so up goes your bid.
Auctioneers such as those on eBay bet their profits on simple application of these principles. They also incorporate other psychological ploys. In looking over a few popular advice columns on and off eBay, it seems that one route to your PayPal account involves preying on your emotions. Not only do online sellers exploit the adrenaline rush and excitement value of bidding, but they also target the good feelings you'll have as a result of being a "winner." In fact, eBay proudly proclaims "You've won!" when you've snagged the item. This is not how the outside world defines a "winner," a term usually reserved for the victor of some sort of contest. In auction-land, you're a winner if you laid out more cash than the second-highest bidder. Not much effort involved there. Being called a "winner" makes you feel good, though, and you'll be more likely to go back for more in the future.
Emotional selling also preys on nostalgia. Many eBay sellers specialize in collectibles, often from eras romanticized in people's childhoods. Whether it's your favorite Malibu Barbie that your mother tossed out during a move, your cherished baseball cards, or a complete set of old Superman comic books, you might spend a lot of time and money searching the nooks and crannies of the internet to acquire this seemingly lost connection to the past. Often, the less the intrinsic value of an item the higher the price it will yield to bidders seeking to relive past eras of their lives. This is because people tend to throw out free or cheap items such as Happy Meal toys or Strawberry Shortcake pencils without much concern. At the time, they didn't seem worth keeping but with the passage of time they gain nostalgic value.The law of supply-and-demand translates their rarity into top dollars on the bidding block.
eBay retailers also rely on a few other psychological principles. One is "commitment to consistency," a notion developed by Arizona State professor Robert Cialdini. The idea is simple. Once you throw down the initial gauntlet of your opening bid, say $8.96 for a set of 4 "rare and collectible" Bic pens (with face value of perhaps $2), you will be motivated to follow through on your decision. As the bidding proceeds, you are ready to keep going because to stop would violate your desire to appear to be a consistent person. After all, if you didn't care about the item, why would you have bid on it in the first place?
The situation on eBay is akin to the "foot in the door" and "low balling" techniques that real-life salespeople use to get you to pay more than you intended in brick and mortar stores. You decide to buy a digital camera advertised in an online ad and head out to the store to look at it in person. Turns out they're out of that model. But guess what, there's an "even better" one for just $10 or $20 more. You've made the decision to buy a camera and now that you're there, well, what's another few dollars to follow through on that commitment? Without even being aware of it, you've become a victim of your own desire to appear logical.
The disinhibition effect also occurs during eBay bidding. Normally, disinhibition refers to what happens in group settings such as watching comedies in movie theaters. When a few people laugh at an onscreen joke, you're more likely to let out a chuckle yourself than if there was dead silence. On eBay, disinhibition occurs primarily at the end of the bidding, in those last few crucial moments as you hit the "increase minimum bid" button. In a few seconds, you can spend anywhere from 50 cents to $20 or $30 (or more) depending on the item's value at that point. You become more willing to spend at an increasingly outrageous pace because the unseen others bidding against you are showing the same lack of emotional restraint.
These are just a few of the tactics that can thwart the best intentions of eBay and other online auction buyers. Now here are some ways to avoid these traps.
1. Decide ahead of time on an item's value and set that as your maximum (including shipping costs). This applies primarily to new items. Go online elsewhere and get the item's actual lowest price, again, plus shipping and taxes. If necessary, write that amount down on a post-it note and put it on your monitor. Don't go above that total.
2. Be willing to walk away from the deal. The item you're bidding on, unless it's as rare and valuable as the Crown Jewels, will probably appear elsewhere on another day and perhaps even be offered minutes later from the same seller. If it was something you had your heart set on but the price ran up too high, you might even get a "second chance offer" from the seller, closer to your original bid.
3. Don't go on eBay when you are in an altered state of mind. You're not in Vegas, and no one is handing out free drinks. But if you're having a little après dinner libation, your inhibitions are likely to become looser, and you will more easily lose control of the situation. By the same token, if you're feeling sad or frustrated about other problems in your life, stay away from any site in which an expensive mistake can't be undone.
4. If you really want something, bid wisely. There are tricks to becoming a "winner" on eBay, so do some online research. The two strategies I've seen discussed are either setting your maximum bid at the true maximum you're willing to spend to discourage other bidders or to wait until the last few seconds and then make your strike. The problem with the strategy of waiting till the very end is that you must then keep your emotions in check and stop when the price goes past your limit. For this, refer to points 1, 2, and 3 above!
5. Save your searches for items you really want. You can create a wish list, a watch list, and even a list of favorite sellers. There is some delayed gratification involved in this strategy because you won't get what you want right away, but this way you'll be able to catch the best deal when and if it becomes available.
6. Read the fine print. Sellers who call themselves "authentic" often use deceptive subtext words as disclaimers. If you're not sure of an item's authenticity, write to the seller and ask. Writing to the seller will also help you judge whether this person is legit or not. Also check the country of origin which you can see in the seller's description. You may not want to wait 2 weeks for something to arrive from the other side of the world if you can get it in your own country.
These rules can help you not only on eBay but in the other situations when you're out competing for the best deal in the offline world. Be a wary consumer and your fulfillment (and your bank account) will benefit.
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Copyright Susan Krauss Whitbourne, Ph.D. 2010