Social Presence: Influence on Bidders in Internet Auctions

We study effects of social processes' representation in Internet auctions using laboratory experiments. The inability of participating parties to learn about each others' bidding behaviour and to extend their comprehension beyond what is presented in auction sites today decreases the social influence compared to traditional face‐to‐face auctions. This reality is about to change since new interaction and collaboration technologies are emerging. A conceptual model used here associates social factors influencing bidders and the resulting bidding behaviour. We utilized an online auction simulation framework that facilitates transmission of social cues during an auction and conducted empirical study of behaviour in both English and Dutch auctions. We found that social presence, expressed by virtual presence and interpersonal information, significantly affects both bidding behaviour and market outcomes.