Shooting in the Dark: Do Prices Matter in Ambiguous Environments?

Utteeyo Dasgupta

Studies in Microeconomics, 2016, vol. 4, issue 1, 1-12

Abstract: Abstract In an experiment, we evaluate whether prices of investment options influence choice in an ambiguous environment. We find that even with feedback on previous period’s investment, and repeated decision-making, prices do influence choice in our ambiguous environment. Modal behaviour is rational, that is, for each category of investment subjects choose the lowest available price. However, there is a tendency to associate high-priced ambiguous investment options with better quality. This effect becomes stronger as the price differences between available investment options become larger.

Keywords: Ambiguous environment; price anchoring; decisions under uncertainty (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:sae:miceco:v:4:y:2016:i:1:p:1-12

DOI: 10.1177/2321022215624038

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