What Are the 12 Behavioural Biases at Auctions? A Look Back at Our First Episode

The Elephant In The Room Property Podcast | Inside Australian Real Estate

What drives us to bid at auctions? In this episode, we throw it back to where it all began, revisiting our very first episode that set the stage for everything we’ve explored since. Behavioural biases—those sneaky little tricks your brain plays—are at the heart of this conversation, and we talk about all 12 of them, plus a few extras that make auctions the fascinating psychological arenas they are.

Simon Russell, a behavioural scientist, joins us to break down the surprising ways our subconscious minds react under pressure. From something as simple as a free coffee outside an auction to the auctioneer’s clever use of anchoring, scarcity, and loss aversion, Simon explains how these cues shape our decisions. The reciprocity effect alone—a cup of coffee making you feel like you owe the auctioneer something—might have you rethinking the next time you pick up a bidder’s paddle.

We also get into the emotional rollercoaster that happens when the stakes are high. The auctioneer’s job as a kind of circus master becomes clear when Simon talks about their subtle tactics, like smiling and nodding to encourage bids or creating a sense of urgency with phrases like, “First, second, third…” It’s all designed to keep you—and your wallet—engaged.

Looking back, this conversation with Simon didn’t just lay the foundation for the podcast; it opened our eyes to how much of our behaviour at auctions (and in life) is guided by things we don’t even notice. And while the episode may be nearly seven years old, these lessons are just as relevant today. So, if you’re a seasoned bidder or just curious about what’s going on in your own head, this is one you’ll want to hear—or hear again.

Episode Highlights:

00:00 - Introduction

01:43 - How the podcast came about

05:36 - Who is Simon Russell?

06:30 - What behavioural patterns did you observe at the auction?

07:24 - First bias: Reciprocity effect

10:43 - Does awareness of these biases help mitigate their impact?

11:45 - Second bias: Scarcity effect

16:24 - Third bias: Anchoring

24:46 - Fourth bias: Loss aversion

29:22 - Fifth bias: Framing effect

32:22 - Sixth bias: Sunk cost fallacy

33:36 - Seventh bias: Commitment and consistency effect

39:01 - Eighth bias: Social proof: Herd mentality

43:54 - Ninth bias: Recency effect

48:17 - Tenth bias: Mental accounting

51:31 - Eleventh bias: Overconfidence

54:45 - Twelfth bias: Disposition effect

About Our Guest:

Simon Russell is the founder and Director of Behavioural Finance Australia (BFA). At BFA he provides specialist behavioural finance training & consulting. His services are designed to improve financial decision-making, communication and engagement. He mostly works with fund managers, major super funds, financial advisers and other financial services professionals.

Connect with Simon Russell:

• Website https://www.behaviouralfinanceaustralia.com.au/

• LinkedIn https://au.linkedin.com/in/simonrussellaustralia

Resources:

• Visit our website https://www.theelephantintheroom.com.au

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