The English Auction Method Based on Offline Artwork the Auctioneer Moderates the Impact of the Cognitive and Emotional Processes of the Bidders in the Bidding Behaviour

Abstract

This paper aims to investigate the dynamics of bidder behaviour in offline English auctions, focusing on participants' cognitive and emotional processes. The study provides a comparative analysis of Standard English auctions and resale-based auctions under various informational settings to understand how the auction mitigates cognitive biases that drive bidding. The study shows that resale possibilities positively affect the bidding process, and participants are likely to bid differently from the Nash equilibrium. There is evidence of overbidding, which emerges that the auctioneer's task is essential in regulating these deviations, both in terms of cognitive distortion and emotional response on the part of the bidders. This is because signalling behaviour is prominent and critical, particularly under uncertain resale outcomes. These results advance the auction theory by introducing cognitive and affective factors into the analysis of bidding competition. These ideas provide a prescriptive application for auctioneers in any provenance from the art world to real estate, with implications for increasing bidder accountability and proceeding with efficiency. Due to these reasons, future research should extend the analysis to higher numbers of bidders and other forms of auctions. It should investigate the behaviour of speculators in resale-based markets.