Do bidders require a monetary premium for cognitive effort in an auction?
Research on the influence of cognitive effort on decision making has grown in recent years. We argue that when cognitive effort is required, a decision maker requests a monetary premium for his effort. In our experiment, the participants were asked to bid a price for lotteries of differing complexity that required varying amounts of cognitive effort. Furthermore, some participants were given a simple calculator. We show that the increase in cognitive efforts increases the monetary premium they request, and leads to better pricing of similar lotteries.
Volume (Year): 42 (2013)
Issue (Month): C ()
|Contact details of provider:|| Web page: http://www.elsevier.com/locate/inca/620175|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Binmore, K & Shaked, A & Sutton, J, 1985. "Testing Noncooperative Bargaining Theory: A Preliminary Study," American Economic Review, American Economic Association, vol. 75(5), pages 1178-80, December.
- Mosi Rosenboim & Tal Shavit, 2012. "Whose money is it anyway? Using prepaid incentives in experimental economics to create a natural environment," Experimental Economics, Springer, vol. 15(1), pages 145-157, March.
- Nicholas Bardsley, 2008. "Dictator game giving: altruism or artefact?," Experimental Economics, Springer, vol. 11(2), pages 122-133, June.
- Garbarino, Ellen C & Edell, Julie A, 1997. " Cognitive Effort, Affect, and Choice," Journal of Consumer Research, University of Chicago Press, vol. 24(2), pages 147-58, September.
- Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard H, 1990. "Experimental Tests of the Endowment Effect and the Coase Theorem," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1325-48, December.
- Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
- Nicholas Bardsley, 2005. "Experimental economics and the artificiality of alteration," Journal of Economic Methodology, Taylor & Francis Journals, vol. 12(2), pages 239-251.
- Curley, Shawn P. & Yates, J. Frank & Abrams, Richard A., 1986. "Psychological sources of ambiguity avoidance," Organizational Behavior and Human Decision Processes, Elsevier, vol. 38(2), pages 230-256, October.
- Ran Kivetz, 2003. "The Effects of Effort and Intrinsic Motivation on Risky Choice," Marketing Science, INFORMS, vol. 22(4), pages 477-502, December.
- Richard H. Thaler & Eric J. Johnson, 1990. "Gambling with the House Money and Trying to Break Even: The Effects of Prior Outcomes on Risky Choice," Management Science, INFORMS, vol. 36(6), pages 643-660, June.
- Shogren, Jason F. & Cho, Sungwon & Koo, Cannon & List, John & Park, Changwon & Polo, Pablo & Wilhelmi, Robert, 2001. "Auction mechanisms and the measurement of WTP and WTA," Resource and Energy Economics, Elsevier, vol. 23(2), pages 97-109, April.
When requesting a correction, please mention this item's handle: RePEc:eee:soceco:v:42:y:2013:i:c:p:99-105. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.