Milked for All Their Worth:

In the summer and fall of 1999, the city of Chicago sponsored a public art exhibit of over 300 life-sized fiberglass cows. In November, 140 of the cows were put up for auction; 75 on the Internet and 65 at a live, in-person auction. Collectively, they sold for $3,487,252, almost 7 times initial estimates. This paper attempts to explain this phenomenon by using the theoretical lenses of three models rational choice, escalation of commitment, and a desire to win in a state of competitive arousal. Our analysis of the bids in the on-line auction suggests that competitive arousal may best explain behavior in the Internet auction. We find some support for escalation and almost no support for several rational explanations. Responses to a survey of the bidders who were active in the closing minutes of the on-line auction lend additional, qualitative support for competitive arousal. Responses to a survey of the bidders who participated in the live auction also support competitive arousal and suggest that the effect of arousal may be greater when bidding occurs in the presence of other bidders. We close the paper by conceptualizing auction fever as a derivative of competitive arousal and suggest that a broad model of decision making might include the effects of time-pressure and competition (as well as cognitions). Such a model would provide many theoretical and practical applications, some of which are discussed.