Do bidders require a monetary premium for cognitive effort in an auction?

Mosi Rosenboim (), Tal Shavit () and Chen Cohen

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2013, vol. 42, issue C, 99-105

Abstract: Research on the influence of cognitive effort on decision making has grown in recent years. We argue that when cognitive effort is required, a decision maker requests a monetary premium for his effort. In our experiment, the participants were asked to bid a price for lotteries of differing complexity that required varying amounts of cognitive effort. Furthermore, some participants were given a simple calculator. We show that the increase in cognitive efforts increases the monetary premium they request, and leads to better pricing of similar lotteries.

Keywords: Cognitive effort; Premium; Lottery; Demand effect (search for similar items in EconPapers)
JEL-codes: C91 D03 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:42:y:2013:i:c:p:99-105

DOI: 10.1016/j.socec.2012.11.017

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