anchoring and sunk cost effect

It’s an instance of the so-called anchoring effect in psychology, whereby value is judged (or misjudged) by the first number mentioned...

Why does this happen? For starters, as the researchers explained in the June 2006 issue of The Journal of Personality and Social Psychology, low starting prices reduce barriers to entry, tempting even idle browsers to place bids. The increased traffic then generates higher final prices as more buyers bid against one another. Psychological forces play into it as well. Low starting prices entice bidders to invest time and energy in the auction, and while every M.B.A. student knows it’s dumb to base decisions on sunk costs, the eBay bidders did just that, escalating their commitments to their previous bids.

...
Finally, the researchers showed that traffic begets more traffic because later bidders take the number of earlier bidders as proof of an item’s worth. “You see two auctions for the same shirt, each currently at $25,” Galinsky says. “But one has more bids, so you assume it’s more valuable.” What you don’t realize is that the high number of bids has less to do with the item’s value than with that auction’s attractively low starting price.