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The Dissociation Between Monetary Assessment and Predicted Utility

Author

Listed:
  • On Amir

    () (Rady School of Management, University of California at San Diego, La Jolla, California 92037)

  • Dan Ariely

    () (Fuqua School of Business, Duke University, Durham, North Carolina 27706)

  • Ziv Carmon

    () (INSEAD, Asia Campus, 138676, Singapore)

Abstract

We study the dissociation between two common measures of value—monetary assessment of purchase options versus the predicted utility associated with owning or consuming those options, a disparity that is reflected in well-known judgment anomalies and that is important for interpreting market research data. We propose that a significant cause of this dissociation is the difference in how these two types of evaluations are formed—each is informed by different types of information. Thus, dissociation between these two types of measures should not be interpreted as failure to map utility onto money, as such mapping is not really attempted. We suggest that monetary assessment tends to focus on the transaction in which the purchase alternative would be acquired or forgone (e.g., how fair the transaction seems), failing to adequately reflect the purchase alternative itself (e.g., the expected pleasure of owning or consuming it), which is what informs predicted utility judgments. We illustrate the value of this idea by deriving and testing empirical predictions of disparities in the impact of different types of information and manipulations on the two types of value assessment.

Suggested Citation

  • On Amir & Dan Ariely & Ziv Carmon, 2008. "The Dissociation Between Monetary Assessment and Predicted Utility," Marketing Science, INFORMS, vol. 27(6), pages 1055-1064, 11-12.
  • Handle: RePEc:inm:ormksc:v:27:y:2008:i:6:p:1055-1064
    DOI: 10.1287/mksc.1080.0364
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    File URL: http://dx.doi.org/10.1287/mksc.1080.0364
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    References listed on IDEAS

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    1. Shiv, Baba & Huber, Joel, 2000. "The Impact of Anticipating Satisfaction on Consumer Choice," Journal of Consumer Research, Oxford University Press, vol. 27(2), pages 202-216, September.
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    6. Carmon, Ziv & Ariely, Dan, 2000. "Focusing on the Forgone: How Value Can Appear So Different to Buyers and Sellers," Journal of Consumer Research, Oxford University Press, vol. 27(3), pages 360-370, December.
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    Citations

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    Cited by:

    1. Nicole Koschate-Fischer & Katharina Wüllner, 2017. "New developments in behavioral pricing research," Journal of Business Economics, Springer, vol. 87(6), pages 809-875, August.
    2. Campos-Vazquez, Raymundo M. & Cuilty, Emilio, 2014. "The role of emotions on risk aversion: A Prospect Theory experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 50(C), pages 1-9.
    3. Balázs Kovács & Glenn R. Carroll & David W. Lehman, 2014. "Authenticity and Consumer Value Ratings: Empirical Tests from the Restaurant Domain," Organization Science, INFORMS, vol. 25(2), pages 458-478, April.
    4. Gesche, Tobias, 2018. "Reference Price Shifts and Customer Antagonism: Evidence from Reviews for Online Auctions," Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181650, Verein für Socialpolitik / German Economic Association.
    5. Comerford, David A. & Ubel, Peter A., 2013. "Effort Aversion: Job choice and compensation decisions overweight effort," Journal of Economic Behavior & Organization, Elsevier, vol. 92(C), pages 152-162.

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