Re-examining coherent arbitrariness for the evaluation of common goods and simple lotteries
AbstractThe assumption that people make decisions based on a constant set of preferences, so that choices should not depend on context-specific cues (anchors), is one of the cornerstones of economic theory. We reexamined the effects of an anchoring manipulation on the valuation of common market goods that was introduced in Ariely, Lowenstein and Prelec (2003). We found much weaker anchoring effects. We performed the same manipulation on the evaluation of binary lotteries, and we found no anchoring effects. This suggests limits on the robustness of strong anchoring effects. Hence, the evidence that people have "arbitrary preferences" may not be conclusive, and economic theory may still be valid in many cases of interest.
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Bibliographic InfoPaper provided by "Carlo F. Dondena" Centre for Research on Social Dynamics (DONDENA), Università Commerciale Luigi Bocconi in its series Working Papers with number 034.
Length: 30 pages
Date of creation: Nov 2010
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-11-20 (All new papers)
- NEP-EXP-2010-11-20 (Experimental Economics)
- NEP-HPE-2010-11-20 (History & Philosophy of Economics)
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