Economists Puzzled by "Irrational" EBay Buyers

Funny. Economists have found that in 43% or more  of the  auctions the bidders ended up paying more than the 'buy it now' price. And this trend effects all price categories...

Some economists are puzzled by this behavior they refer to as irrational.

Funny. They've never been to a live farm auction. I attended one...once. Never again. The whole point of having an auction is to incite a buyer frenzy that's based on obsessive, complusive, competition between buyers not a rational numbers-based decision. 

Yes, it's emotion-based. But it's not irrational. It's very rational, very predictable. The premium paid (gladly by repeat buyers anyway) is for the emotional experience, the adrenaline rush of the chase and the resulting victory.

This is built into eBay's service...an emotionally rewarding experience culminating in the conquest, the purchase...at any price. It's a value-add. Very rational. Very emotional.

That's what you need for your business. A value-added experience for your customers that they can get only with you, only consistently with you, in a safe setting with a trusted source. Then customers will gladly pay a premium of 25% or more for your product.

But it's not really a premium. You're giving more, more than what they can get at a 25% discount elsewhere. In their mind, they're coming out ahead. You met their needs and they gladly paid you, thanked you actually, with offering a premium, a tip so to speak for the great experience.

eBay's success is they've institutionalized this experience, streamlined it, insured it, built themselves as a trusted advisor where caution isn't necessarily thrown to the wind but...the customers can approach without being guarded or wary. And it's there when the customer wants it, not only on Saturdays standing in the hot sun (summer) or brutal winds whipping down (winter). And it's seemingly in private without your neighbors next door seeing wha' chur buying or what you're paying.

Article at USAToday.