 How does the perceived value of a medium of exchange depend on its set of possible uses?Stephen A. Spiller and Dan Ariely Organizational Behavior and Human Decision Processes, 2020, vol. 161, issue C, 188-200 Abstract: The normative value of a medium of exchange is derived from the best consumption that it permits. Adding potential uses can increase the normative value of a medium of exchange but not decrease it. In two large preregistered experiments (total N = 2205), including one with incentive-compatible measures, we find that the perceived value of a medium of exchange systematically lies below this normative benchmark, such that adding a less-attractive set of potential uses decreases a medium of exchange’s perceived value. Moreover, the extent of undervaluation depends on the difference in value between the potential uses, and there is no evidence of undervaluation when preferences among potential uses are articulated in advance. More generally, these findings reveal that the perceived value of a medium of exchange depends not only on the expected value of the best alternative but also on the set of alternatives. Keywords: Money; Medium of exchange; Willingness to pay; Averaging (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jobhdp:v:161:y:2020:i:c:p:188-200 DOI: 10.1016/j.obhdp.2020.07.005 Access Statistics for this article Organizational Behavior and Human Decision Processes is currently edited by John M. Schaubroeck More articles in Organizational Behavior and Human Decision Processes from Elsevier |
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