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From Hypothetical to Real: Analyzing WTA Bias in Pawn Shop Deals

Author

Listed:
  • Andrea Morone

    (University of Bari "Aldo Moro", Bari, Italy)

  • Paola Tiranzoni

    (Focus Economics, Barcelona, Spain)

Abstract

Understanding the divergence between hypothetical and actual willingness-to-accept (WTA) valuations is important for both economic theory and real-world applications. This study analyzes this divergence using a unique dataset from the reality television series Pawn Stars, which captures authentic bargaining interactions. We examine how item characteristics - such as type, origin, price range - and negotiation factors - like buyer experience and expert appraisal - influence hypothetical bias and negotiation outcomes. Our empirical findings reveal a persistent positive hypothetical bias, mainly driven by higher price ranges and specific item categories. Items acquired through purchase or discovery exhibit less bias than personal possessions, and high-value goods display smaller disparities between hypothetical and actual WTA valuations. These results enhance our understanding of real-world bargaining dynamics and provide valuable insights into mitigating hypothetical biases in economic assessments.

Suggested Citation

  • Andrea Morone & Paola Tiranzoni, 2024. "From Hypothetical to Real: Analyzing WTA Bias in Pawn Shop Deals," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 8(2), pages 41-54, December.
    • Handle: RePEc:beh:jbepv1:v:8:y:2024:i:2:p:41-54
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    References listed on IDEAS

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