Reserve price and competing bids: Reference points for product evaluations in online auctions?

Abstract

With an increasing number of products sold in online auctions, the effect of reference points on consumers' product valuations has received much attention in the literature. Two potentially relevant factors affecting bidders' preferences are the sellers' reserve price and the competing bids by other bidders. The current evidence regarding these reference points is mixed. We argue that a focus on studying bids prevents a clear identification of reference point effects. Directly observing product valuations, in two experiments, we find that willingness to pay in online auctions is affected by both reserve prices and competing bids, supporting the constructed values paradigm. Copyright © 2015 John Wiley & Sons, Ltd.

Heuristics in Mutual Fund Consumers' Willingness‐to‐Invest: An Experimental Approach

“…This results shows that consumers make appraisals in the presence of numerous indications of price or contextual information (Bertini, Wathieu, and Iyengar ; Kamins, Folkes, and Fedorikhin ; Wathieu and Bertini ). Evidence from Trautmann and van de Kuilen ()) show that in the context of bids, the information offered in the course of the bids creates reference points for the participants. The clues present in the environment affect appraisals, and these consequently influence consumers' willingness‐to‐pay, i.e., the demand.…”

Influence of contextual information and past prices on the willingness to pay and expected quality evaluations

“…Following Trautmann and Kuilen (), who find evidence of direct effects of reference prices on WTP for online auctions, we expect that during the process of dental service searching and comparing, the contextual information available regarding prices will enable the consumer to form a reference price that will have an effect on the WTP. Also, for the case of EXQ, according to Wolinsky () and Erickson and Johansson (), who state that prices influence beliefs about the quality of a product, it is to be expected that when the quality is not a directly observable attribute, individuals use the price to infer quality.…”

¿Podemos ser racionales al comprar una casa? Una visión desde la Economía Conductual

“…No hay que olvidar que la dependencia a un punto de referencia inicial es un mecanismo psicológico y por lo tanto puede estar influenciada por una suerte de afecto inicial que condiciona los juicios posteriores (King & Slovic, 2014;Slovic et al, 2007). No es por lo tanto extraño distinguir entre un aspecto más mecánico y otro más psicológico a la hora de estudiar la influencia que las referencias previas tienen sobre nuestros juicios (Trautmann & Kuilen, 2015).…”