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Misperception of Economic Terms: Evidence From a Choice Experiment in Japan

SeEun Jung (), Yasuhiro Nakamoto, Masayuki Sato and Katsunori Yamada ()
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Yasuhiro Nakamoto: Kansai University, Takatsuki, Japan
Masayuki Sato: Kobe University, Kobe, Japan

International Journal of Applied Behavioral Economics (IJABE), 2018, vol. 7, issue 2, 1-14

Abstract: Using original internet-based survey data which was collected in Japan, the authors estimate the parameters of the utility functions with a social comparison using the random utility model framework. In line with classical income comparison literature, this article observes a negative effect of others' saving on their own utility along with a positive effect of one's own saving. However, this article finds that an increase in consumption decreases one's own utility while an increase in other's consumption has no significant effect on one's own utility. Regarding potential mechanisms behind the puzzling result of own consumption, the authors may be able to explain it with psychological effects coming from Japanese social norms, in which the term “own consumption” can be negatively perceived.

Date: 2018
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