IDEAS home Printed from https://ideas.repec.org/a/bla/metroe/v70y2019i1p119-143.html
   My bibliography  Save this article

Much ado about extremes: An experimental test of the shaping effect of prices on preferences

Author

Listed:
  • Sergio Beraldo
  • Valerio Filoso
  • Marco Stimolo

Abstract

There is evidence of a shaping effect of market prices on subjects’ evaluations in repeated private value auctions. This evidence has been traditionally interpreted as a pure behavioural phenomenon in contexts where the only available information is the market price. In this paper, we enrich the subjects’ information set by providing in treatment groups additional information on extreme asks. Our main results show a shaping effect both in the control and in the treatments and a stronger effect of the extreme information that more than halves the effect of the market price on subjects’ asks. Differently from the existing literature, we find that the provision of additional information inactivates the well‐documented tendency of the market price to fall at each auction round as a consequence of over‐asking correction. We discuss different possible mechanisms underlying this key finding.

Suggested Citation

  • Sergio Beraldo & Valerio Filoso & Marco Stimolo, 2019. "Much ado about extremes: An experimental test of the shaping effect of prices on preferences," Metroeconomica, Wiley Blackwell, vol. 70(1), pages 119-143, February.
    • Handle: RePEc:bla:metroe:v:70:y:2019:i:1:p:119-143
    DOI: 10.1111/meca.12232
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/meca.12232
    Download Restriction: no
    File URL: https://libkey.io/10.1111/meca.12232?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:metroe:v:70:y:2019:i:1:p:119-143. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0026-1386 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.