Housing minister orders review of online bidding portals amid 'gamification' concerns

Many estate agents now offer prospective buyers an online platform service which allows them to register to view current offers and place their own bids around the clock. Some of these portals include text or email alerts, so potential buyers are updated when a new bid is put on the property they are interested in.

Housing minister James Browne has now asked officials in his department to review these portals and is also considering a closed-bidding system to take the heat out of house buying.

His comments have been backed up by Prof O'Gara, who called for a "slower, more measured process".

"It's almost like a battle that people get into online, it's a form of online gaming and you may or may not win," said the consultant psychiatrist, specialising in addiction medicine.

"What it does is it taps into a lot of the cognitive effects of gambling, where it increases and ratchets up the pressure on people to act if they feel they are missing out.

"It creates a scenario where people would spend more than they ordinarily would.

"So it gamifies it, and it also blinds the process." 

The near miss phenomenon

He warned that gambling has been "normalised" and has infiltrated several other areas through the use of 'variable schedule reinforcement', which is the same mechanism used to keep people at slot machines, even when they lose.

"So people would have been through many of these processes before and had what is called 'near misses' — the near miss phenomenon — so they almost got there and almost got the big purchase, which is what this is, because there is such pressure on people," he said.

"In my view, it completely mimics gambling, and it puts people in an unfortunate position to ultimately gamble. It really does encourage people to spend more than they ordinarily would. 

"Not everyone is going to be vulnerable to that, but some people will be, and they will find that they put themselves into financial difficulties."

Mr Browne recently said that "instinctively" he would have "concerns" about the pressure these online platforms put on people, and warned that they may spark bidding wars, where people find themselves placing bids higher than they can afford.

Impulse decision-making

Mr Browne, who was instrumental in progressing the Gambling Regulation Act when he was a junior minister in the Department of Justice, said: "I would have spent a lot of time speaking with professionals in the area of gambling, and that impulse is quite dangerous for people, especially if they feel under pressure and they put themselves into situations at 3am, that they might,  in the cold of the day, not have put themselves into."

He added: "Bringing my previous experience to bear, my previous conversations with psychiatrists in the area of mental health and the area of gambling, I know impulse decision-making, where you're spending an awful lot of money, and you feel under pressure for all sorts of reasons. You know that can be quite dangerous for people." 

The Economic and Social Research Institute (ESRI) published findings earlier this year that found bids were pushed higher in "open auctions", such as through estate agents and online platforms, than in a sealed bid auction.

Those in open auctions were found to be more likely both to exceed their original budget and to bid higher than what they thought the property was worth.