TY - JOUR
T1 - Towards a competitive arousal model of decision-making
T2 - A study of auction fever in live and Internet auctions
AU - Ku, Gillian
AU - Malhotra, Deepak
AU - Murnighan, J. Keith
N1 - Funding Information:
This project benefited from the assistance and support of several organizations and many people. First, we gratefully acknowledge the financial assistance of the Dispute Resolution Research Center at the Kellogg School of Management at Northwestern University. We also thank auction organizers from all over North America who provided us access and insights to their auctions. Michael Jensen, Chen-Bo Zhong, and Adam Galinsky provided both comments and help with the data analysis. Finally, we thank Don Moore, Madan Pillutla, and Alvin Roth for their constructive comments on earlier versions of this manuscript.
PY - 2005/3
Y1 - 2005/3
N2 - In 1999, Chicago sponsored a public art exhibit of over 300 life-sized fiberglass cows that culminated in 140 Internet and live, in-person auctions. Collectively, the cows sold for almost seven times their initial estimates. These unexpectedly high final prices provided the impetus for a model of decision-making, "competitive arousal," which focuses on how diverse factors such as rivalry, social facilitation, time pressure, and/or the uniqueness of being first can fuel arousal, which then impairs decision-making. In Study 1, live and Internet bidding and survey data from 21 auctions throughout North America tested the model's predictions, as well as hypotheses derived from rational choice and escalation of commitment models. Analyses provided considerable support for the competitive arousal and escalation models, and no support for rational choice predictions. Study 2 was a laboratory experiment that investigated the similarities and differences between escalation and competitive arousal, finding again that both can result in overbidding. The discussion focuses on the implications of these findings and on the broader issue of competitive arousal and escalation and their impact on decision-making.
AB - In 1999, Chicago sponsored a public art exhibit of over 300 life-sized fiberglass cows that culminated in 140 Internet and live, in-person auctions. Collectively, the cows sold for almost seven times their initial estimates. These unexpectedly high final prices provided the impetus for a model of decision-making, "competitive arousal," which focuses on how diverse factors such as rivalry, social facilitation, time pressure, and/or the uniqueness of being first can fuel arousal, which then impairs decision-making. In Study 1, live and Internet bidding and survey data from 21 auctions throughout North America tested the model's predictions, as well as hypotheses derived from rational choice and escalation of commitment models. Analyses provided considerable support for the competitive arousal and escalation models, and no support for rational choice predictions. Study 2 was a laboratory experiment that investigated the similarities and differences between escalation and competitive arousal, finding again that both can result in overbidding. The discussion focuses on the implications of these findings and on the broader issue of competitive arousal and escalation and their impact on decision-making.
KW - Arousal
KW - Auctions
KW - Competition
KW - Decision-making
KW - Escalation of commitment
KW - Rivalry
KW - Social facilitation
KW - Time pressure
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U2 - 10.1016/j.obhdp.2004.10.001
DO - 10.1016/j.obhdp.2004.10.001
M3 - Article
AN - SCOPUS:15044347830
SN - 0749-5978
VL - 96
SP - 89
EP - 103
JO - Organizational Behavior and Human Decision Processes
JF - Organizational Behavior and Human Decision Processes
IS - 2
ER -