Common consequence effects in pricing and choice

U. Schmidt, S.T. Trautmann

Research output: Contribution to journalArticleScientificpeer-review

Abstract

This paper presents an experimental study of common consequence effects in binary choice, willingness-to-pay (WTP) elicitation, and willingness-to-accept (WTA) elicitation. We find strong evidence in favor of the fanning out hypothesis (Machina, Econometrica 50:277–323, 1982) for both WTP and WTA. In contrast, the choice data do not show a clear pattern of violations in the absence of certainty effects. Our results underline the relevance of differences between pricing and choice tasks, and their implications for models of decision making under risk.
Original languageEnglish
Pages (from-to)1-7
JournalTheory and Decision
Volume76
Issue number1
Early online date4 Jan 2013
DOIs
Publication statusPublished - Jan 2014

Fingerprint

willingness to pay
pricing
Decision making
Costs
decision making
evidence
Willingness-to-pay
Willingness to accept
Pricing
Willingness
Violations
Decision making under risk
Experimental study
Binary choice
Decision Making
Certainty
Experimental Study

Keywords

  • Common consequence effects
  • fanning out
  • WTP
  • WTA
  • cancelation

Cite this

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Common consequence effects in pricing and choice. / Schmidt, U.; Trautmann, S.T.

In: Theory and Decision, Vol. 76, No. 1, 01.2014, p. 1-7.

Research output: Contribution to journalArticleScientificpeer-review

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