During the last week I spent some time watching the Barrett-Jackson collector car auction. Anyone involved with collector cars has heard of Barrett-Jackson. Each January they hold a huge auction. This year I believe they sold something like 2,000 cars!
I love old cars and quite often you'll find me at a local show in my '65 Chevy. Often you'll hear guys (and gals) talking about the eye-popping bids at Barrett. Yes, there are some exotic, very rare vehicles. But some of the prices are really unbelievable.
As a car guy and a frugal living guy, I tried to figure out what was going on. An auction is a complex psychological dance, but even simple people can gain some insight from studying it.
The first thing is that it's viewed as a competition between the bidders. I just checked and on the homepage of ebay.com, you'll find "Don't just shop. Win!" Wow! Somehow I don't get the feeling of winning when I"m buying a tool at Sears! Missed the whole "winning" experience! Maybe next time.
On TV the announcers talked about it being like an old western shootout between two bidders. (somehow I have trouble picturing Matt Dillon pulling a credit card out of his holster in the opening scene of Gunsmoke) Don't get me wrong. There is a lot of ego involved. And, if someone outbids me, the assumption is that he has more money than I do. That could be a big deal when you know that people all over the country are going to see someone with a bigger bidder's paddle than I have.
Another part of the push to ever higher bids is the audience. When the bidding gets near a round number ($100,000 or $250,000 or $1,000,000) the auctioneer would ask the audience to encourage the bidders. I really don't know why they complied. Should it really matter to me whether someone pays $95k or $100k for a car? If he pays more it favors the seller (who I don't know). If he pays less it favors the buyer (who I also don't know). Why would spectators cheer for higher bids?
The urgency of the situation also effects bidders. You have to make a decision right now. Not tomorrow. Not later. Right now. And, (you're told over and over) you don't want to miss this one. Once it's gone you may never get another chance at it. So step up now before it's too late.
One other thing seemed noteworthy. For the really high-end stuff, there are buyers for museums and very private collections. These buyers are typically very calm and collected. The auctioneers don't seem to try to goad them into higher bids. My guess is that they know that won't work on them. They've done their research before the bidding began and they pretty much know exactly how high they are willing to go. (and they won't change their mind in the middle of the bidding)
So what's this have to do with you? You're not thinking of buying a collector car. Ahh, but you do shop on eBay.com. And, you've got a bid in on that cute little purse that closes in 15h 56m. Don't want to miss that. The seller says that it's unique. Plus there are other people who are bidding on it. Some might even see your name on the 'high bidder' space. Kinda sounds familiar doesn't it. The same tactics work no matter what's being sold at auction.
So, just as you'd be careful not to accidentally buy a $50,000 car at Barrett-Jackson, it's probably a good idea not to make a mistake and buy a $50 purse on eBay.com.