Negotiation isn't about winning

Everyone likes a bargain! Well, most people do anyway, except for those people who buy a second hand Islabike on eBay. If you are not familiar with the kids' bike market, Islabike is the premium brand to be seen on and are in high demand. It is not unusual to see 3 or 4 year old examples sell for 70-80% of their original retail price, and we're talking here about £250-300. It's staggering. But why do they fetch such high used prices?

This can be explained partly by understanding a little about auction theory (addressed in future posts) - an example of which would be blind auctions. Unlike blind auctions where people bid once based on their researched private valuation of the market (or what they're willing to pay), eBay bidders are permitted multiple bids. This encourages competition, where bidders get utility not from paying what they think the item is worth but on winning the deal, especially if the item is in high demand. They get so caught up in the psychological process, that they "over-bid" and hence their private valuation of the item becomes dynamic, reacting to other bidders' valuations. It is not surprising therefore, that as the clock ticks down bidders lose sight of their original valuation and focus on winning the auction.

So, the next time you bid for something on eBay, you'd be wise to set yourself an absolute ceiling price, otherwise you'll easily fall into an expensive winning mentality.

Happy negotiating!