Common consequence effects in pricing and choice

Ulrich Schmidt and Stefan Trautmann

Theory and Decision, 2014, vol. 76, issue 1, 7 pages

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. Copyright Springer Science+Business Media New York 2014

Keywords: Common consequence effects; Fanning out; WTP; WTA; Cancelation (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s11238-012-9349-9

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