Competition Makes Good Fences

When participants assumed competing bidders were different from themselves, “they didn’t have to be nice.”
Competition Makes Good Fences

Past research has found that most people tend to assume that perfect strangers are similar to themselves. Except when they’re in competitive situations—then, according to a new study, all bets are off.

Three researchers have found that during online auctions, people often bid more aggressively if other bidders are anonymous than they do if they believe other bidders are similar to themselves. The study co-authors include David Norton of the University of Connecticut School of Business in Storrs; Cait Poynor Lamberton of the University of Pittsburgh’s Katz Graduate School of Business in Pennsylvania, and Rebecca Walker Naylor of The Ohio State University’s Fisher College of Business in Columbus.

In several experiments, students were asked to bid in simulated online auctions after reading one of three profiles of competing bidders. The first described someone demographically similar to the participant; the second, someone different; and the third, an anonymous stranger. Then, participants bid on an energy drink. The first group’s average bid was 75 cents; the second group’s was $1.22. But the third group’s average bid was highest of all at $1.28.

In another experiment, students from the University of South Carolina, whose mascot is the Gamecocks, were shown one of the same three bidder profiles. But this time half the students bid on a site called “eBay Auctions”; the other half, on “Gamecock Auctions.” As before, students in the first group who were shown the anonymous profile bid the highest. But students in the second group who were shown the same profile were not as aggressive because they believed other bidders were affiliated with their own school.

When participants assumed competing bidders were different from themselves, they “didn’t have to be nice,” says Naylor. Buyers need to be aware of this tendency, she adds, because such unconscious bias “will get the competitive juices fl owing, and you might end up paying more than you really want.”

Moreover, to get the best deals in online auctions, buyers might want to go to sites that specialize in the merchandise they’re looking for. On such sites, bidders might assume everyone else has similar interests, which could make them bid less aggressively.

“The Devil You (Don’t) Know: Interpersonal Ambiguity and Inference Making in Competitive Contexts” appears in the August 2013 issue of the Journal of Consumer Research.