Is Overbidding in Online Auctions the Result of a Pseudo-Endowment Effect?

The Bidder's Curse

“…However, we can test one specific form, the quasi-endowment effect. Bidders might become more attached to auction itemsand hence willing to pay more -the longer they participate in the auction, in particular as the lead bidder (Heyman, Orhun, Ariely, 2004;Wolf, Arkes, Muhanna, 2005). Even though it is questionable whether the quasi-endowment effect can explain bidding above the fixed price for identical items, we test for a positive relation between overbidding and time spent on the auction, both overall and as lead bidder.…”

Anticipation of Auction Fever: Entry Decision, Reserve Price and the Choice of Auction Design

“…(), Wolf et al . () examine bids from eBay Motors’ auctions and find that the probability that an individual bidder will rebid positively depends on the amount of time she has participated in the auction and the aggregated duration she was listed as the high bidder. Bramsen (), who studies on‐line Danish furniture auction, also founds that wiliness to bid positively depends on the time the respective bidder was the leading bidder during the course of the auction.…”

“…(), and Wolf et al . () apply the idea of endowment effect to bidders in English auctions. They argue that during the course of the auction, bidders may partially adapt to the possibility of winning the item and their valuation of the item increases.…”

“…(), Wolf et al . (), and Bramsen () argue that the time the bidder was listed as the top bidder and the time she was actively involved in the auction increase the bidder's perceived ownership of the item. As a result, the bidder's perceived valuation of the object will increase and she will bid more than she intended to at the beginning of the auction.…”

“…Hoch and Loewenstein (1991) argue that, after consumers decide to buy a product, their status quo changes and they start to consider not buying the product as losing it. Ariely and Simonson (2003), Heyman et al (2004), and Wolf et al (2005) apply the idea of endowment effect to bidders in English auctions. They argue that during the course of the auction, bidders may partially adapt to the possibility of winning the item and their valuation of the item increases.…”