EMOTIONS IN ELECTRONIC AUCTIONSA PHYSIO-ECONOMIC APPROACH ONINFORMATION SYSTEMS

Though auctions show a prevailing dominance in electronic markets, our understanding of howauctions work on human behaviour is still rather limited. In this paper we analyse the impact ofemotional processes on the decision making of human agents in electronic auctions. The analysis isbased 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 studyare the electrodermal activity and the heart rate of the experiment participants. Based on thephysiological results, we conclude that human agents tend to cognitively set a price at which theywant to end the auction, but once they reach that specific price, they are tempted due to emotionalprocesses to wait a little longer in order to increase their nominal payoff. Further we argue that theadaption of psychophysiological methodologies is not limited to mechanism design, but can be ofconsiderable assistance for successful design of information systems in general.