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There are plenty of factors to consider when participating in car auctions, whether they’re in-person or through an app or website–and failing to prepare can lead to losses both immediate and down the line. One factor that we don’t often think of–ironically–is our own cognitive biases: the patterned ways that we tend to misperceive situations, which then lead to ineffective behaviors and less-than-ideal results.

Hopefully, this article will help you identify and account for some of those biases before they lead you astray.

Commitment Escalation

Commitment Escalation is the tendency for people, once they’ve taken intentional action down a certain path, to keep taking similar or escalating actions simply because they’ve already committed–whether or not they should according to their current circumstances and the outcomes of those actions.

For example, you’ll have a natural pull to keep bidding on a vehicle just because you already have, not necessarily because it’s actually the best move for you currently in the auction.

Confirmation Bias

This bias is about your brain’s tendency to seek out and favor information that aligns with what you already believe, and discount or dismiss info that runs contrary to your beliefs.

One example of this is when you originally had a vehicle targeted, and the fact that so many other dealers are interested/bidding on it “proves” to you that you were correct.

Loss Aversion

Your brain puts far more emphasis on avoiding threat, pain, and loss than it does on seeking opportunity, pleasure, or gains.

In an auction situation, this can manifest in being fearful about losing out on a specific vehicle in the bidding process, and even the fear of coming away from the auction empty-handed.

One Big Problem: Momentum Bidding

Have you heard of “momentum bidding”? This is a phenomenon that costs people money at every single auction. What goes into people getting swept up in this “momentum”? Why the biases we just discussed. Here’s how it plays out:

You do your research and select a car you plan on bidding on. Then you bid. Then others start bidding as well.

Given what you’ve already committed–research, preparation, and initial bid(s)–commitment escalation kicks in to keep you bidding.

And as others bid, your brain takes that as evidence that you’re right about this vehicle (and of course ignores the fact that most people aren’t bidding on it)–and so you’re even more confident in continuing to bid. That’s confirmation bias at work.

And as the intensity of the auction picks up, these other factors are leading you to value the vehicle more and more, which of course makes potentially losing it seem like a bigger and bigger loss–which the brain seeks to avoid through the loss aversion bias.

So you just keep on bidding, regardless of your actual situation or any new information encountered. Your biases and feelings are running your auction. And that can be very costly.

Conclusion

It is important to set bidding parameters based on expert-analyzed data relevant to your unique dealership before you begin any auction, so that guides are put in place before any of these cognitive biases have a chance to kick in and, eventually, lead to buyer’s remorse. CarQuant automates vehicle acquisition from auction to dealership delivery, saving significant amounts of time and money while greatly reducing uncertainty.

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