Abstract
Studies have shown that users experience regret in online electronic auctions. Our study adds to the research on the antecedents of regret by examining the effects of the major types of auction design on users’ experience of regret. Towards this goal, we analyzed bidders’ experience of regret in English and Dutch auctions. Given that English and Dutch auctions are known to produce different types of bidding behavior and outcomes, we expect that the two types of auction design will also have a differential impact on experiencing regret. We report results from a lab experiment that was implemented as a self-developed mobile application for hotel room reservations. We examined the effects of the two open-bid auction types on the experience of regret, and found that users are more likely to experience regret in Dutch auctions. We point out the theoretical relevance and practical implications of our findings.
Highlights
A Deluxe room in the Radisson Cable Beach & Gold Resort in Nassau, Bahamas is being auctioned online
While numerous studies have examined the effects of regret on bidding behavior (Engelbrecht-Wiggans and Katok 2007, 2008, 2009), little remains known about the emotional state of regret
By building on studies such as those of Engelbrecht-Wiggans (1989) and Jiang et al (2016), our study shows how different types of auction design induce the emotion of regret
Summary
A Deluxe room in the Radisson Cable Beach & Gold Resort in Nassau, Bahamas is being auctioned online. In light of the above, related research has focused on several key aspects of electronic markets, such as designing optimal market mechanisms and auctions, understanding buyer and seller behavior, and the economic modeling of online markets (Anandalingam et al 2005) Despite these affordances and the fact that online marketplaces are known to close the information gaps between buyers and sellers (Lusch et al 2010), several market anomalies (e.g., overbidding) have been observed in these environments (Feng et al 2016). Among other things, such anomalies, like general bidding behavior, have commonly been attributed to the inherent emotions that are present in conditions of decision-making under uncertainty (Engelbrecht-Wiggans and Katok 2008; Smith and Dickhaut 2005). One type of emotion to which the electronic markets and auctions literature has devoted particular attention is that of regret
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