E-commerce has proved to be fertile ground for new business models, which may be patented (for up to 20 years) and have potentially far-reaching impact on the e-commerce landscape. One such electronic market is the reverse-auction model popularized by Priceline.com. There is still uncertainty surrounding the survival of such new electronic markets currently available on the Internet. Understanding user behavior is necessary for better assessment of these sites' survival. This paper adds to economic analysis a formal representation of the emotions evoked by the auction process, specifically, the excitement of winning if a bid is accepted, and the frustration of losing if it is not. We generate and empirically test a number of insights related to (1) the impact of expected excitement at winning, and frustration at losing, on bids across consumers and biddings scenarios; and (2) the dynamic nature of the bidding behavior—that is, how winning and losing in previous bids influence their future bidding behavior.

We demonstrate that decision making is more heuristic in situations that involve spending time rather than money. Relative to participants in the money condition, those in the time condition show a higher propensity to choose a compromise option (experiment 1) and to rely on an arbitrary anchor (experiment 2). We propose that such heuristics are used more for time because, compared to monetary expenditures, temporal expenditures are harder to account for. Consistent with this proposition, when participants in both time and money conditions are primed to account for their expenditures, they no longer differ in their use of heuristics. The associated response times offer additional process evidence (experiment 3). (c) 2008 by JOURNAL OF CONSUMER RESEARCH, Inc..

Consumers love bargains. The possibility of cheaper products urges people to drive to far-away outlet malls, the prospect of getting a discount makes them clip and save coupons, and the promise of instant savings at the time of purchase is reason enough to sign up for the store-specific credit card. How far are consumers willing to go for such bargains? Consider an example of two stores:

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This article investigates the psychological underpinnings of relative thinking-the tendency of consumers to consider relative savings, and not just absolute savings, in their decisions to search for a deal or purchase an item. We examine how (i) cognitive load, (ii) the affective-richness of the product, and (iii) the consumer's propensity for intuitive decision-making influence relative thinking. As hypothesized, high cognitive load and affect-rich (vs. affect-poor) products, and individual level preference for intuitive decision-making aggravate this behavior. Our results present clear managerial implications along with developing a better understanding of the behavioral foundations of relative thinking.Economic rationality assumes that people maximize utility. In the domain of price savings, this translates into a consumer who should try to maximize absolute savings when comparing prices. However, psychophysical research has shown that people also care about relative differences and not just absolute differences. This translates into a consumer who works harder to save $5 on a $20 product, versus on a $100 product. This article investigates the psychological underpinnings of this relative thinking. We examine how (i) cognitive load, (ii) the affective nature of the product, and (iii) consumer's predisposition for intuitive decision-making influence relative thinking. We find that increased cognitive load, affect-rich (vs. affectpoor) products, and individual level preference for intuitive decision-making heighten this behavior.

The current research proposes that situationally activated anxiety--whether incidental or integral-impairs decision making. In particular, we theorize that anxiety drives decisionmakers to more heavily emphasize subjective anecdotal information in their decision making, at the expense of more factual statistical information--a deleterious heuristic called the anecdotal bias. Four studies provide consistent support for this assertion. Studies 1A and 1B feature field experiments that demonstrate the role of incidental anxiety in enhancing the anecdotal bias in a choice context. Study 2 builds on these findings, manipulating individuals' incidental anxiety and showing how this affects the anecdotal bias in the context of message evaluations. Study 2 also provides direct evidence that only high-arousal negative emotions such as anxiety/worry enhance the anecdotal bias, not just any negative emotion (e.g., sadness). While the first three studies examine how incidental anxiety impacts choice, the last study demonstrates the effect of integral anxiety on decision making, manipulating anxiety by intensifying participants' perceived risk. Our results show that--consistent with findings from our first three studies--the anecdotal bias is enhanced when anxiety is heightened by individuals' perception of risk.

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