Sunday, December 10, 2006

Bright ideas

We already knew that our neighbor Maeda's son Adam Galinsky was a bright guy, but it's nice to see it confirmed in today's New York Times Magazine.

Low Starting Prices Lead to High Auction Sales.

Why does this happen? For starters, as the researchers explained in the June 2006 issue of The Journal of Personality and Social Psychology, low starting prices reduce barriers to entry, tempting even idle browsers to place bids. The increased traffic then generates higher final prices as more buyers bid against one another. Psychological forces play into it as well. Low starting prices entice bidders to invest time and energy in the auction, and while every M.B.A. student knows it’s dumb to base decisions on sunk costs, the eBay bidders did just that, escalating their commitments to their previous bids.

More eBay advice from Adam: look for misspellings, and don't assume you have to see a photo.

No comments: