Electronic Markets

, Volume 26, Issue 4, pp 339–355

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
  • Christof Weinhardt
Research Paper

DOI: 10.1007/s12525-016-0224-3

Cite this article as:
Hariharan, A., Adam, M.T.P., Teubner, T. et al. Electron Markets (2016) 26: 339. doi:10.1007/s12525-016-0224-3

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 

JEL Classification

D44 D87 L81 

Supplementary material

12525_2016_224_MOESM1_ESM.docx (69 kb)
ESM 1(DOCX 69 kb)

Copyright information

© Institute of Applied Informatics at University of Leipzig 2016

Authors and Affiliations

  • Anuja Hariharan
    • 1
  • Marc Thomas Philipp Adam
    • 2
  • Timm Teubner
    • 1
  • Christof Weinhardt
    • 1
  1. 1.Karlsruhe Institute of Technology (KIT)KarlsruheGermany
  2. 2.University of New CastleCallaghan NSWAustralia