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True context-dependent preferences? The causes of market-dependent valuations

Publication ,  Journal Article
Mazar, N; Koszegi, B; Ariely, D
Published in: Journal of Behavioral Decision Making
January 1, 2014

A central assumption of neoclassical economics is that reservation prices for familiar products express people's true preferences for these products; that is, they represent the total benefit that a good confers to the consumers and are, thus, independent of actual prices in the market. Nevertheless, a vast amount of research has shown that valuations can be sensitive to other salient prices, particularly when individuals are explicitly anchored on them. In this paper, the authors extend previous research on single-price anchoring and study the sensitivity of valuations to the distribution of prices found for a product in the market. In addition, they examine its possible causes. They find that market-dependent valuations cannot be fully explained by rational inferences consumers draw about a product's value and are unlikely to be fully explained by true market-dependent preferences. Rather, the market dependence of valuations likely reflects consumers' focus on something other than the total benefit that the product confers to them. Furthermore, this paper shows that market-dependent valuations persist when - as in many real-life settings - individuals make repeated purchase decisions over time and infer the distribution of the product's prices from their market experience. Finally, the authors consider the implications of their findings for marketers and consumers. © 2013 John Wiley & Sons, Ltd.

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Published In

Journal of Behavioral Decision Making

DOI

EISSN

1099-0771

ISSN

0894-3257

Publication Date

January 1, 2014

Volume

27

Issue

3

Start / End Page

200 / 208

Related Subject Headings

  • Social Psychology
  • 5204 Cognitive and computational psychology
  • 3507 Strategy, management and organisational behaviour
  • 3506 Marketing
 

Citation

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Mazar, N., Koszegi, B., & Ariely, D. (2014). True context-dependent preferences? The causes of market-dependent valuations. Journal of Behavioral Decision Making, 27(3), 200–208. https://doi.org/10.1002/bdm.1794
Mazar, N., B. Koszegi, and D. Ariely. “True context-dependent preferences? The causes of market-dependent valuations.” Journal of Behavioral Decision Making 27, no. 3 (January 1, 2014): 200–208. https://doi.org/10.1002/bdm.1794.
Mazar N, Koszegi B, Ariely D. True context-dependent preferences? The causes of market-dependent valuations. Journal of Behavioral Decision Making. 2014 Jan 1;27(3):200–8.
Mazar, N., et al. “True context-dependent preferences? The causes of market-dependent valuations.” Journal of Behavioral Decision Making, vol. 27, no. 3, Jan. 2014, pp. 200–08. Scopus, doi:10.1002/bdm.1794.
Mazar N, Koszegi B, Ariely D. True context-dependent preferences? The causes of market-dependent valuations. Journal of Behavioral Decision Making. 2014 Jan 1;27(3):200–208.
Journal cover image

Published In

Journal of Behavioral Decision Making

DOI

EISSN

1099-0771

ISSN

0894-3257

Publication Date

January 1, 2014

Volume

27

Issue

3

Start / End Page

200 / 208

Related Subject Headings

  • Social Psychology
  • 5204 Cognitive and computational psychology
  • 3507 Strategy, management and organisational behaviour
  • 3506 Marketing