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Field Experiments on Anchoring of Economic Valuations

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Author Info

  • Jonathan E. Alevy

    ()
    (Department of Economics, University of Alaska Anchorage)

  • Craig E. Landry

    ()
    (Department of Economics, East Carolina University)

  • John A. List

    ()
    (Department of Economics, University of Chicago)

Abstract

A pillar of behavioral research is the view that preferences are constructed during the value elicitation process, but it is unclear whether, and to what extent, such biases influence real market equilibria. This paper examines the “anchoring” phenomenon in the field. The first experiment produces evidence that inexperienced consumers can be anchored in the value elicitation process, yet there is little evidence that experienced agents are influenced by anchors. The second experiment finds that anchors have only transient effects on prices and quantities traded: aggregate market outcomes converge to the intersection of supply and demand after a few market periods.

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File URL: http://www.econpapers.uaa.alaska.edu/RePEC/ala/wpaper/ALA201102.pdf
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Bibliographic Info

Paper provided by University of Alaska Anchorage, Department of Economics in its series Working Papers with number 2011-02.

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Date of creation: 2011
Date of revision:
Handle: RePEc:ala:wpaper:2011-02

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Web page: http://www.cbpp.uaa.alaska.edu/CBPPHome/DepartmentsandMajors/Economics.aspx
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Keywords: field experiment; anchoring; valuation; experience;

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References

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  1. Donald Green & Karen Jacowitz & Daniel Kahneman & Daniel McFadden, 1995. "Referendum Contingent Valuation, Anchoring, and Willingness to Pay for Public Goods," Working Papers, University of California at Berkeley, Econometrics Laboratory Software Archive _010, University of California at Berkeley, Econometrics Laboratory Software Archive.
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  12. Dan Ariely & Uri Gneezy & George Loewenstein & Nina Mazar, 2005. "Large stakes and big mistakes," Working Papers, Federal Reserve Bank of Boston 05-11, Federal Reserve Bank of Boston.
  13. David Lucking-Reiley & John A. List, 2000. "Demand Reduction in Multiunit Auctions: Evidence from a Sportscard Field Experiment," American Economic Review, American Economic Association, American Economic Association, vol. 90(4), pages 961-972, September.
  14. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, Econometric Society, vol. 48(4), pages 817-38, May.
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Citations

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Cited by:
  1. Meub, Lukas & Proeger, Till, 2014. "An experimental study on social anchoring," Center for European, Governance and Economic Development Research Discussion Papers 196, University of Goettingen, Department of Economics.
  2. Meub, Lukas & Proeger, Till, 2014. "Are groups 'less behavioral'? The case of anchoring," Center for European, Governance and Economic Development Research Discussion Papers 188, University of Goettingen, Department of Economics.
  3. Zacharias Maniadis & Fabio Tufano & John A List, 2013. "One Swallow Doesn’t Make a Summer: New Evidence on Anchoring Effects," Discussion Papers, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham 2013-07, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  4. Zacharias Maniadis & Fabio Tufano & John List, 2013. "One Swallow Does not Make a Summer: New Evidence on Anchoring Effects," Levine's Working Paper Archive 786969000000000824, David K. Levine.
  5. Sugden, Robert & Zheng, Jiwei & Zizzo, Daniel John, 2013. "Not all anchors are created equal," Journal of Economic Psychology, Elsevier, Elsevier, vol. 39(C), pages 21-31.
  6. Drew Fudenberg & David K Levine & Zacharias Maniadis, 2010. "On the Robustness of Anchoring Effects in WTP and WTA Experiments," Levine's Working Paper Archive 661465000000000312, David K. Levine.
  7. Meub, Lukas & Proeger, Till & Bizer, Kilian, 2013. "Anchoring: A valid explanation for biased forecasts when rational predictions are easily accessible and well incentivized?," Center for European, Governance and Economic Development Research Discussion Papers 166, University of Goettingen, Department of Economics.

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