When Online Shoppers Are Likely to Overspend
Your competitive streak may end up costing you in a big way online. New research has found that visitors overspend on auction sites where they do not know who they are competing against.
It all depends on how visitors view other people on the websites they visit, says study co-author Rebecca Walker Naylor. Visitors to competitive auction websites, like eBay, often see other visitors to those sites as competition since they are both bidding against one another for the same products. On the other hand, visitors to sites like Yelp or Amazon are often perceived as a friend or ally and therefore visitors do not see them as a threat.
"When you’re competing against people you don’t know, you actually bid much more aggressively than you might normally, because you assume that these strangers aren’t similar to you," said Naylor, an assistant professor of marketing at Ohio State University’s Fisher College of Business. "You feel you have the license to bid aggressively because the other bidders aren’t like you and you don’t have to be nice tothem."
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That competitiveness can really end up costing shoppers in the long run.
In the research, Naylor and her research team studied how people bid in three different circumstances. The participants were first told they were bidding against someone similar to themselves. They were then told they were bidding against someone very different from themselves. Lastly, participants were not told how similar or different they were from the person they were bidding against.
The researchers found that participants bid the most when competing against the anonymous party. Since that mirrors the way most people operate when bidding online, the researchers warn online shoppers to recognize their propensity to overspend.
"You need to be aware that, whether you mean to or not, you will naturally see other anonymous bidders as different from you," said Naylor, who conducted the research along with Cait Poynor Lamberton of the Katz Graduate School of Business at the University of Pittsburgh and David Norton at the University of Connecticut. "That will get the competitive juices flowing and you might end up paying more than you really want."
The researchers also said that online consumers can take advantage of the research in another way by visiting specialty sites when shopping online. Shoppers who visit specialty sites may be less likely to overbid since they are bidding against others who share similar interests.
"Our results held true regardless of the other factors we manipulated," Naylor said. "When they are competing online, people treat anonymous others like they are different from them."
The research will be published in the August 2013 issue of the Journal of Consumer Research.
This story was provided by BusinessNewsDaily, a sister site to LiveScience. Follow David Mielach on Twitter @D_M89 and on Google+. Follow us @bndarticles, Facebook or Google+. Originally published on BusinessNewsDaily.
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