I wrote about “sale order” and if it matters here:
Our topic today involves decision fatigue, comparing decisions made by bidders early in an auction versus later, or decisions made early in the day versus later.
Research strongly suggests that the brain wears through the day — tires, and basically takes one of two strategies later in the day involving shortcuts.
The brain either,
- Becomes reckless, or acts impulsively instead of expending the energy to first think through the consequences.
- Does little or nothing, and saves energy by making less decisions.
What does this mean for an auctioneer? It’s not entirely clear.
If bidders become reckless or act impulsively later in an auction, or in an auction later in the day — then that’s a good thing for auctioneers and sellers. However, if bidders tend to do “nothing” and save mental energy later in an auction, or in an auction later in the day, then that’s a bad thing for auctioneers and sellers.
Fortunately researchers (at the University of Minnesota, Ben-Gurion University, Case Western, Christian-Albrechts University, the University of St. Gallen, Columbia and Florida State University) have analyzed this notion extensively and it appears that the later-in-the-day decisions generally cause the brain to look for less trade-offs. In other words, a tired brain still makes decisions, but is more open to suggestion, and wants less information.
What does an auction do? Auctions take property (real and personal) and reduce the entire offering to one issue — price.
I think given the simplicity of an auction, versus say, choosing the right color, size, amperage, watts and brand of the speakers for an important patio party, tends to suggest an auction would benefit from decision fatigue.
Would an auction at 5:00 p.m. realized more money than that same auction beginning at 9:00 a.m.? Maybe so.
Heightened decision making might suggest the opposite, in that when the brain is fresh and open to decision making, the trade-offs are processed? For an auction, those considerations might include closing costs, storage, hauling, cost of ownership, lack of warranty or guarantee … all things which might depress bidding.
We’ve long suggested that the best property in a line of property offering should be offered for auction “early.” Necessarily not first, middle or last.
Auction flow should likely follow this pattern (for example, a cosmic microwave background spectrum flow.)
Start with good property, move upward in price early, and then trail off later to lesser valuable property.
Yet, given this plan, does research suggest that once bidders are exposed to an auction, their decision fatigue is a factor, causing the property later in the auction to increase in price in excess of what it might demand otherwise?
We probably have more questions here than answers; however, these seem to be important questions and answers.
“Decision fatigue” was coined by social psychologist Roy F. Baumeister. Baumeister once said that, “The best decision makers are the ones who know when not to trust themselves.” Maybe auctioneers need to know how to create an environment where those decision makers don’t know that they can’t trust themselves?
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. His Facebook page is: www.facebook.com/mbauctioneer. He serves as Adjunct Faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.