Book ChapterDOI
Experimental Tests of the Endowment Effect and the Coase Theorem
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In this paper, the Coase theorem predicts that about half the mugs will trade, but observed volume is always significantly less than the predicted volume, suggesting that transactions costs cannot explain the undertrading for consumption goods.Abstract:
Contrary to theoretical expectations, measures of willingness to accept greatly exceed measures of willingness to pay. This paper reports several experiments that demonstrate that this "endowment effect" persists even in market settings with opportunities to learn. Consumption objects (e.g., coffee mugs) are randomly given to half the subjects in an experiment. Markets for the mugs are then conducted. The Coase theorem predicts that about half the mugs will trade, but observed volume is always significantly less. When markets for "induced-value" tokens are conducted, the predicted volume is observed, suggesting that transactions costs cannot explain the undertrading for consumption goods.read more
Citations
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Journal ArticleDOI
Modeling the Psychology of Consumer and Firm Behavior with Behavioral Economics
TL;DR: This article reviewed six behavioral economics models that are useful to marketing, including sensitivity to reference points and loss aversion, social preferences toward outcomes of others, and preference for instant gratification, allowing decision makers to make mistakes, encounter limits on the depth of strategic thinking, and learn from feedback.
Posted Content
The Deadweight Loss of Christmas
TL;DR: In this paper, the authors studied the effect of holiday gift-giving on the U.S. economy and found that it is worth between 10 percent and a third of the value of the presents.
Book
Against Autonomy: Justifying Coercive Paternalism
TL;DR: If it is permissible, even obligatory, to stop me when I do something that seriously interferes with someone else's chances of achieving the life he wants, I think this makes no sense.
Journal ArticleDOI
Using Laboratory Experimental Auctions in Marketing Research: A Case Study of New Packaging for Fresh Beef
TL;DR: In this article, the use of laboratory experimental auctions in a pretest market research program for new products is discussed, and a step-by-step example of how a theoretically incentive compatible auction mechanism fifth-price, sealed-bid was used in a laboratory pret test market for vacuum-packaged beef.
Journal ArticleDOI
Viewpoint: On the generalizability of lab behaviour to the field
Steven D. Levitt,John A. List +1 more
TL;DR: In this article, a road map of the psychological and economic properties of people and situations that might interfere with generalizability of laboratory results from a broad class of games is provided.
References
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Book ChapterDOI
Prospect theory: an analysis of decision under risk
Daniel Kahneman,Amos Tversky +1 more
TL;DR: In this paper, the authors present a critique of expected utility theory as a descriptive model of decision making under risk, and develop an alternative model, called prospect theory, in which value is assigned to gains and losses rather than to final assets and in which probabilities are replaced by decision weights.
Journal ArticleDOI
Loss Aversion in Riskless Choice: A Reference-Dependent Model
Amos Tversky,Daniel Kahneman +1 more
TL;DR: In this article, the authors present a reference-dependent theory of consumer choice, which explains such effects by a deformation of indifference curves about the reference point, in which losses and disadvantages have greater impact on preferences than gains and advantages.
Journal ArticleDOI
Toward a positive theory of consumer choice
TL;DR: The economic theory of the consumer is a combination of positive and normative theories as discussed by the authors, which describes how consumers should choose, but it is also described how they do choose, and in certain well-defined situations many consumers act in a manner that is inconsistent with economic theory.
Posted Content
Fairness as a Constraint on Profit Seeking: Entitlements in the Market
TL;DR: In customer or labor markets, it is acceptable for a firm to raise prices (or cut wages) when profits are threatened, and to maintain prices when costs diminish as mentioned in this paper, and several market anomalies are explained by assuming that these standards of fairness influence the behavior of firms.
Journal ArticleDOI
De gustibus non est disputandum
George J. Stigler,Gary S. Becker +1 more
TL;DR: In this paper, the Notre collegue Christophe Longuet nous offre une traduction inedite de cet article canonique precedee d'une presentation, en tout point remarquable, vous sera certainement tres utile.