Brain imaging finds whypeople overbid at auctions

New York University neuroscientists and economists have combined functional MRI with behavioral economic research to discover why people tend to overbid for products sold at auction: fear of losing a social competition.

Investigators examined brain activation patterns while volunteers played either an auction game with a partner or a lottery game.Winning the auction game depended on outbidding a partner, a key social difference that could be seen in variations of activation in the striatum. Past fMRI studies have linked the striatum with reward-related brain activity.

The study was published in the Sept. 26 issue of the journal Science (2008;21 [5897]:1849-1852).The social competition inherent in an auction produced a more pronounced blood oxygen level-dependent response to losing an auctioned item than to winning it.

The magnitude of the BOLD effect correlated directly with the amount of overbidding. A follow-up behavioral economic study confirmed these findings in real life.