Topic: Bidding Frenzy: How the Speed of Competitor Reaction Influences Product

Valuations in Auctions.

Speaker: Peter T.L. Popkowski Leszczyc, Associate Professor of Marketing, University of Alberta.

Time: 3:45-5:00pm, April 21th, 2010.

Location: Room217, New Building of GSM, Peking University.

Abstract:

This paper examines the effects of competitive interaction among consumers on their product valuations in open ascending-bid (English) auctions. We propose that, as a result of the interactive nature of such auctions, bidders may experience a mental state, which we refer to as *bidding frenzy*, that is characterized by a high level of arousal or excitement, a sense of competition, and a strong desire to win. Our focus is on one key aspect of the intensity of competition in an auction on consumers’ product valuations: the frequency of arrival of others’ bids. The effects of bidding frenzy on consumers’ product valuations were examined in five laboratory experiments. We find that an auction participant’s experienced level of bidding frenzy increases as the pace at which others submit bids increases. This causes consumers to value the auctioned product more highly.

Welcome to attend!