Swoopo, a new kind of “entertainment shopping” auction site, takes Martin Shubik’s classic Dollar Auction game to a whole new, automated, mass participation level. It’s an example of the escalation of commitment, or a sunk cost fallacy, where we increase our commitment (in this case with real money) even though (in this case) most users’ positions are becoming less and less valuable.
Thee Cake Scraps has a good analysis of how this works:
It is a ‘auction’ site…sort of. Swoopo sells bids for $1. Each time you use a bid on an item the price is increased by $0.15 for that item. So here is an example:
Person A buys 5 bids from Swoopo for $5 total. Person A sees an auction for $1000 and places the first bid. The auction is now at $0.15. Person A now has a sunk cost of $1 (the cost of the bid they used). There is no way to get that dollar back, win or lose. If Person A wins they must pay the $0.15.
Person B also purchased $5 of bids. Person B sees the same auction and places the second bid. The auction price is now $0.30 (because each bid increases the cost by exactly 15 cents). Person B now has a sunk cost of $1. If Person B wins they must pay the $0.30. Swoopo now has $2 in the bank and the auction is at 30 cents.
This can happen with as many users as there are suckers to start accounts. Why are they suckers? Because everybody that does not have the top spot just loses the money they spent on bids. *Poof* Gone. If you think this sounds a little like gambling or a complete scam you are not alone. People get swept up into the auction and don’t want to get nothing for the money they spent on bids.
The key thing seems to be that some bidders will win items at lower than RRP, i.e. they get a good deal, but for every one of those, there are many, many others who have all paid for their bids (money going to Swoopo) and received nothing as a result. The house will always win.
Swoopo staff respond here and here (at Crunchgear).
As is obligatory with this blog, I need to ask: where else have systems been designed to use this behaviour-shaping technique? There must be many examples in auctions, games and gambling in general - but can the idea be applied to consumer products/services, using escalating commitment to shape user behaviour? Can this be applied to help users save energy, do more exercise, etc as opposed merely to extracting value from them with no benefit in return?
I guess I have to post this here, instead of where it is more on-topic, or it simply gets ignored.
In the “London Design Festival: Greengaged” article there is a broken link to a Youtube video that does not apparently exist. Probably it’s a typo in the URL, but regardless: please change the link so that it works as originally intended.
looking forward for more information about this. thanks for sharing. Eugene
The YouTube link has still not been corrected, nor has there been any other response to my reporting the broken link.
That is incorrect.
Please respond in a correct and appropriate manner within five (5) days.
Failed.
There has been no response or correction when a serious bug in the web site was reported. There has been no new activity in three weeks. Site appears to no longer be maintained.
Bookmark deletion scheduled.
Good-bye.
http://www.rapidbargain.com/index.php is another example of this kind of evil stuff…
I foolishly bought bids on this site, yes I won an item, paid for it, and 5 weeks later I am still waiting for the item, this is to me has been a tough lesson in “you get nothing for nothing and nothing is free”, I may never get the item I “WON” so I will now make sure I tell everyone that this is just a scam. I would say its a form of gambling, but to chase the “hare” and never get it is just a con, this site shold be looked into.
Warn everyone you know to keep well clear.
Catherine
Thanks everyone for the comments.
I’m sorry I didn’t reply to None of 3’s comments quickly enough; I’ve been pretty much solidly occupied with other work recently and the blog had to take a bit of a back seat. I do apologise, but I’m not sure quite why it annoyed him so much. It wasn’t a typo in the URL: YouTube had removed the video because of an infringement claim.
Well, then why didn’t you put it back???
None of 3, are you a pain in the bloody neck! Go back and read the freaking manual, mate! The video was “removed because of an infringement claim”. This means YOU DON’T GET TO PUT IT BACK, you moron! It would infringe the copyright laws again! So stop harassing decent people and get a real job! @sshole!