Commitment cost and product valuation in online auctions: An experimental research

Date
2010
Authors
Mancha, Ruben
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Abstract

Online auctions are widely used in online markets to efficiently sell and purchase goods, but we have little empirical knowledge on which factors influence the auction participants' perceptions and decisions in this economic setting. A theoretical model was developed based on an adaptation of Commitment Cost Theory (Zhao & Kling, 2000, 2001; Lusk, 2003). It proposes the existence of a mechanism by which Commitment Cost, the cost of the uncertainty perceived in the auction, mediates the relation between the auction mechanism, the information released in the environment, and personality traits of the bidder on the outcomes of the auction. Both economic and psychological outcomes were evaluated: Willingness to Pay, Shopping Enjoyment and Intention of Future Use.

A random assignment experiment was the controlled setting to test the theory. The most relevant result of this study is the identification of Commitment Cost as a mediating construct between personality and environmental factors and auction outcomes. The findings have implications in three main areas: they support the study of individual characteristics in online auctions (Pinker et al., 2003; Lusk & Shogren, 2007); Commitment Cost Theory offers a psychological mechanism for exploring the relation between individual differences and economic outcomes; and results reveal the existence of hedonic perceptions in the auction participants.

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Keywords
Bidder Behavior, Commitment Cost, Online Auctions, Shopping Enjoyment, Willingness to Pay
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Department
Information Systems and Cyber Security