Evaluating Electronic Market Designs: The Effects of Competitive Arousal and Social Facilitation on Electronic Group Buying

This article presents an evaluation approach for alternative electronic market designs and examines the impact of competitive arousal under time pressure on market performance in a group-buying setting. Drawing on theory from economics, decision theory, and information systems, we present a competitive arousal model for a social buying setting that posits that introducing competitive arousal among buyers reduces buyer profits and that social facilitation can mitigate these costs through better task completion and time to completion rates. Using an economic experiment, we found that rivalry has a negative effect on buyer profits but also that competitive arousal increases the efficiency of social facilitation in terms of group formation. We discuss the implications of these results.