Emotions in Electronic Auctions - A Physio-Economic Approach on Information Systems

Though auctions show a prevailing dominance in electronic markets, our understanding of how auctions affect human behaviour is still rather limited. In this paper we analyse the impact of emotional processes on the decision making of human agents in electronic auctions. The analysis is based on a physio-economic study, in which human agents take part in a Dutch auction experiment, while their physiological parameters are recorded simultaneously. Parameters evaluated in this study are the electrodermal activity and the heart rate of the experiment participants. Based on the physiological results, we conclude that human agents tend to cognitively set a price at which they want to end the auction, but once they reach that specific price, they are tempted due to emotional processes to wait a little longer in order to increase their nominal payoff. Further we argue that the adaption of psychophysiological methodologies is not limited to mechanism design, but can be of considerable assistance for successful design of information systems in general.