What is the point of the "Buyer's Premium"?

[raulus]

Originally Posted by Casey2296

These people should not be making bids in an AH format.

I think it's less about being bad at math, and more about the psychological effect. For whatever reason, my suspicion is that bidders feel better about bidding $100 (plus 20%) than bidding $120, even though they're exactly the same thing.

[Peter_Spaeth]

Originally Posted by raulus

I think it's less about being bad at math, and more about the psychological effect. For whatever reason, my suspicion is that bidders feel better about bidding $100 (plus 20%) than bidding $120, even though they're exactly the same thing.

Why are you all presuming what other people think?

[raulus]

Originally Posted by Peter_Spaeth

Why are you all presuming what other people think?

It's a suspicion, not a presumption.

[Peter_Spaeth]

Originally Posted by raulus

It's a suspicion, not a presumption.

Fine, what's your basis for suspecting what other people think, if you yourself don't think that way?

[raulus]

Originally Posted by Peter_Spaeth

Fine, what's your basis for suspecting what other people think, if you yourself don't think that way?

Never said I didn't think that way. I suspect that I myself at times feel better about bidding $100 (plus 20%) than bidding $120, even though they're the same thing.

[Peter_Spaeth]

Originally Posted by raulus

Never said I didn't think that way. I suspect that I myself at times feel better about bidding $100 (plus 20%) than bidding $120, even though they're the same thing.

But if you know it's the same thing, why on earth would you feel better about it, I really don't follow you.

[raulus]

Originally Posted by Peter_Spaeth

But if you know it's the same thing, why on earth would you feel better about it, I really don't follow you.

It's all in the psychology of being a human. Smaller numbers feel less expensive than bigger numbers, even though they're the same amount in the end.

As mentioned by others earlier, it's no different than why retailers charge $0.99 instead of a dollar. It feels like it's less psychologically, even though we all know that it's really just $1.00.

And no different than why the gas station adds $0.009 to the price of your gas by sneaking it in there at the end of the price with a small 9 that is 3 decimal places out, rather than just rounding up to a full penny.

[raulus]

Originally Posted by Peter_Spaeth

But if you know it's the same thing, why on earth would you feel better about it, I really don't follow you.

It's also okay to admit that as humans, we're sometimes irrational. I know it's uncomfortable to admit to it, but it's a feature, not a bug.