If you are placing a bid on a project on a freelance job site such as oDesk, Elance, or freelancer, what bid number do you think would get the most bids? The first bid, the third bid, or the last bid?

If you said the last bid, you would be correct. According to research done by Yu Wu of Stanford University, Hang Ung of Ecole Polytechnique, and Christina Aperjis of HP Labs, the last bid is the most likely bid to be picked. All other bid numbers were chosen with the same frequency.

The researchers believed that the reason that the last bid was chosen more was due to “sunk cost fallacy” reasoning. What this means is that the employer selects the last bid to justify the time spent waiting, even though the last bid should not be held in higher regard than the other bids.

After thinking about the situation, I think that there may be two additional reasons that the last bid is chosen.

Reason number one:

When people say “It’s always in the last place you look.” Of course it is. Why the f#%@ would you keep looking after you’ve found it?
- George Carlin

Once an employer got a good bid, they would select the bidder and stop the bidding process which would prevent additional bids from being placed.

Reason number two:

Careful bidders. A bidder on a fixed price project needs as much information on the project in order to determine a good price. A bidder like this is likely to contact the employer earlier in the process with questions, while the other bidders are placing bids. As they get more information, they are able to place an accurate (but late) bid, but in the process, they also build a relationship with the perspective employer.

The research paper is available here:

http://www.hpl.hp.com/research/scl/papers/sunkcost/RACsunkcost.pdf