A new tactic for reverse auctions
26 September 2008 | Steve Bagshaw
By Paul Snell
A study published today in the journal Science brings good news for buyers.
The research revealed that fear of losing often leads to people overbidding in auctions.
By scanning the brains of those taking part in auctions both against humans and computers, scientists found an exaggerated response when contestants lost against real people. Those with the biggest difference in response were most likely to overbid for items in the auction.
This definitely sounds like something purchasers could exploit. Want a better result from your reverse auction? Why not get your suppliers in the same room so they can see the whites of each other’s eyes.
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I would be wary of getting the best price simply because of a bidder’s ‘fear of losing’. This might not represent best value as they might later compromise on quality and/or service delivery when their costings ‘fail to add up’.
I am quite interested in the possibility of scanning my suppliers’ brains during meetings and negotiation sessions.
Be warned: If you’re doing an expensive tender and suppliers offer prices that they can’t afford to stick to, you’ll have wasted a lot of time and money.