Diminishing Marginal Value
The notion of diminishing marginal value has had a profound impact on the development of neoclassical theory. Early neoclassical scholars had considerable difficulty convincing contemporaries of the new paradigm's value until political economists, including Jevons and Walras, used the critical assumption of diminishing marginal value to link utility and demand. While diminishing marginal value remains a key component of modern economic intuition, there is surprisingly little empirical verification of its existence or level. This paper gathers field data across a myriad of subject pools--from undergraduate students to PTA members to sportscard enthusiasts--to examine several aspects of preferences in both price and exchange institutions. Examining behavior of nearly 900 subjects across several treatments, we find strong evidence of diminishing marginal value.
|Date of creation:||2004|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (414) 918-3190
Fax: (414) 276-3349
Web page: http://www.aaea.org
More information through EDIRC
References listed on IDEAS
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.:
- Knetsch, Jack L, 1989. "The Endowment Effect and Evidence of Nonreversible Indifference Curves," American Economic Review, American Economic Association, vol. 79(5), pages 1277-84, December.
- Munro, Alistair & Sugden, Robert, 2003. "On the theory of reference-dependent preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 50(4), pages 407-428, April.
- Theodore W. Schultz, 1962. "Reflections on Investment in Man," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1.
- Horowitz, John K. & McConnell, K. E., 2003. "Willingness to accept, willingness to pay and the income effect," Journal of Economic Behavior & Organization, Elsevier, vol. 51(4), pages 537-545, August.
- Harrison, Glenn W, 1992. "Theory and Misbehavior of First-Price Auctions: Reply," American Economic Review, American Economic Association, vol. 82(5), pages 1426-43, December.
- John List, 2003.
"Does market experience eliminate market anomalies?,"
Natural Field Experiments
00297, The Field Experiments Website.
- John A. List, 2003. "Does Market Experience Eliminate Market Anomalies?," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 41-71, February.
- Horowitz, John K. & McConnell, Kenneth E., 2002. "A Review of WTA/WTP Studies," Journal of Environmental Economics and Management, Elsevier, vol. 44(3), pages 426-447, November.
- Horowitz, John K. & McConnell, K. E., 2000. "Values elicited from open-ended real experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 41(3), pages 221-237, March.
- Smith, Vernon L, 1982. "Microeconomic Systems as an Experimental Science," American Economic Review, American Economic Association, vol. 72(5), pages 923-55, December.
- Gwendolyn Morrison, 1997. "Willingness to pay and willingness to accept: some evidence of an endowment effect," Applied Economics, Taylor & Francis Journals, vol. 29(4), pages 411-417.
- 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.
- E. Elisabet RutstrÃm, 1998. "Home-grown values and incentive compatible auction design," International Journal of Game Theory, Springer, vol. 27(3), pages 427-441.
When requesting a correction, please mention this item's handle: RePEc:ags:aaea04:20297. 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: (AgEcon Search)
If references are entirely missing, you can add them using this form.