Told Your Rival Might Be Human? You'll Overspend, Study Finds
Just a label about who you're competing against can change how much money you waste.
The experiment was simple. Researchers took 1,395 people and put them into a repeated bidding contest called an "all-pay auction" — meaning everyone pays whatever they bid, but only the top bidder wins the prize. Think of it like a raffle where you buy tickets and the losing tickets still cost you money. Before each round, players were told who they were up against: a human, an AI trained to act like a person, or an AI trained purely to compete well. Nobody was lied to.
The wording alone changed behaviour. When a human opponent seemed possible, the typical bid climbed by 6.7 points. When an optimising machine seemed possible, it dropped by 8.8 points. That gap is roughly 15% of the prize's total value — created entirely by what people were told, not by who they actually faced. The authors checked whether strategy or personality explained it. It didn't. People simply dug in harder when a person was in the picture.
Facing an actual AI opponent produced a different, mixed result. Bids went down, which sounds like good news for the wallet. But it also made it less likely that both sides finished the round with positive earnings — meaning the money didn't just get saved, it got redistributed in ways that left more players worse off overall. Two separate effects, the study argues: one from the opponent, one from the information.
Why should you care? Because AI is now your competitor in more places than you think — freelance job boards, ad auctions, ticket resales, travel pricing, even salary negotiation tools. The study shows that how a platform describes your rival — "another bidder" versus "an automated system" — quietly changes how much you spend. That's a lever companies and regulators can pull, deliberately or not. So the next time you're bidding against someone, it's worth asking: do I actually know who, or what, I'm up against? Or am I just reacting to a label?
- Telling people a rival might be human raised typical bids by about 15% of the prize's value — from words alone.
- Telling them the rival was a win-focused machine made them bid less, but also left fewer players with any profit.
- The effect wasn't explained by strategy or personality differences, suggesting it's an automatic competitive reflex.
Why It Matters
The labels platforms put on AI rivals can quietly make you overpay in auctions, gigs, and online marketplaces.