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Expectations, Satisfaction, and Utility from Experience Goods: A Field Experiment in Theaters

Author

Listed:
  • Ayelet Gneezy
  • Uri Gneezy
  • Joan Llull
  • Pedro Rey-Biel

Abstract

Understanding what affects satisfaction from consumption is fundamental to studying economic behavior. However, measuring subjective hedonic experiences is not trivial, in particular when studying experience goods in which quality is difficult to observe prior to consumption. We report the results of a field experiment with a theater show in which the audience pays at the end of the show under pay-what-you-want pricing. Using questionnaires, we measure expected enjoyment before the show, as well as the realized enjoyment after. Correlating the amounts paid with the expected and realized enjoyment, we find that individuals with a larger gap between reported expectations and enjoyment pay significantly more. Once we account for the satisfaction gap, the level of expected enjoyment or realized enjoyment has no significant effect in predicting payments.

Suggested Citation

  • Ayelet Gneezy & Uri Gneezy & Joan Llull & Pedro Rey-Biel, 2016. "Expectations, Satisfaction, and Utility from Experience Goods: A Field Experiment in Theaters," Working Papers 944, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:944
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    File URL: http://www.barcelonagse.eu/sites/default/files/working_paper_pdfs/944.pdf
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    References listed on IDEAS

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    1. Daniel Kahneman & Peter P. Wakker & Rakesh Sarin, 1997. "Back to Bentham? Explorations of Experienced Utility," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 375-406.
    2. Loukas Balafoutas & Adrian Beck & Rudolf Kerschbamer & Matthias Sutter, 2013. "What Drives Taxi Drivers? A Field Experiment on Fraud in a Market for Credence Goods," Review of Economic Studies, Oxford University Press, vol. 80(3), pages 876-891.
    3. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    4. Uwe Dulleck & Rudolf Kerschbamer & Matthias Sutter, 2011. "The Economics of Credence Goods: An Experiment on the Role of Liability, Verifiability, Reputation, and Competition," American Economic Review, American Economic Association, vol. 101(2), pages 526-555, April.
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    Cited by:

    1. Tim Lohse & Salmai Qari, 2018. "Video Recordings in Experiments – Are There Effects on Self-Selection or the Outcome of the Experiment?," Discussion Papers of DIW Berlin 1751, DIW Berlin, German Institute for Economic Research.
    2. Tim Lohse & Salmai Qari, 2018. "Video recordings in experiments – Are there effects on self-selection or the outcome of the experiment?," Economics Bulletin, AccessEcon, vol. 38(3), pages 1381-1394.

    More about this item

    Keywords

    experience goods; pay-what-you-want; expectations;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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