ANALYSIS
ANALYSIS
Now we must vote for and this is a mouthful- the person we think other people think other people will find most attractive.
We could keep adding layers of complication. But this gets us to the point. What appears at first glance to be a straightforward competition in a newspaper needs to be understood at a deep psychological level. When put into a competitive market, things happen to our brains.
The bidding brain
This carries over to the specific case of the auction. We might attend an auction with an uncomplicated plan to bid on a single item, based on predetermined criteria, with a set price range- or price target- in mind. Anyone who has bid at an auction knows it is not that easy.
Time is usually limited. Competing bids influence you emotionally. Seeing that classic car or house might spike your emotions. These aren’ t necessarily bad things. As we covered in the first piece in this series, auctions bring benefits that other markets can’ t, and emotion is part of that. Still, the more one understands about the psychology of auctions, the better.
Auctions and anchoring
Anchoring is one of the best-understood behavioural biases. Most clearly explained by Kahneman and Tversky in the 1970s, the principle is simple and intuitive. The first figure we see in some context tends to be a number to which we“ anchor” our subsequent calculations. This explains why sales are effective. Advertisers know to lead with“ Was R100” and follow with“ Now just R79.99”. We anchor to the higher number, and the lower one looks enticing.
In the case of auctions, it is more complex. A starting bid or reserve price might be an anchor. Equally, each competing bid has its own anchoring effect. So, this could change by the second.
36 REI MAGAZINE NOVEMBER 2025