Rationality versus Irrationality of Auction Bidders – Interdisciplinary Perspective

Abstract

The paper discusses the factors determining the decisions made by auction bidders. Special attention is given to auction circumstances creating a specific character of the auction market (auction techniques, access to new information, the influence of the auctioneer on participants’ decision making process, the number of auction participants, the techniques of manipulation, buyers’ valuation of auctioned items). The paper also presents the strategies of auction participants with respect to auction techniques. The author proposes an interdisciplinary approach to the matter in question. From the economic point of view (in a traditional sense) the buyer is treated as homo economicus intending to buy an item at the lowest price. In this sense it is posssible to present an optimal strategy for bidders. Taking into consideration the psychological and sociological concepts, the author discusses other aspects of the auction situation: the personality of bidders, risk aversion, the suffering of defeat in the past, the level of emotional control, selective attention, motivation, etc. Moreover, the paper discusses the rationality and irrationality in the auction decision making process.