Online Bidding Behaviour And Loss Aversion In Cloud Computing Markets: An Experiment

The last few years have witnessed a rapid growth in commoditization and consumption of IT services particularly due to the growing acceptance of cloud computing services. This in turn has led to newer forms of pricing the cloud services such as dynamic pricing. Infact, spot pricing, a dynamic pricing scheme has become mainstream. Cloud consumers using these schemes need to place their bids inorder to procure computing instances. Most of extant research on cloud dynamic pricing focuses on resource allocation problems and bidding strategies. We identify the need to look at behavioural biases of bidders to bring in a holistic perspective to cloud dynamic pricing discussions. In this paper, we conduct an experiment to elicit the impact of a behavioural bias namely, loss aversion, on a cloud consumer’s bidding behaviour. We discuss the social implications of our result to cloud consumers and the economic implications for cloud providers.