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Public and private values

Author

Listed:
  • Dan Ariely
  • Anat Bracha
  • Jean-Paul L'Huillier

Abstract

This paper experimentally examines whether looking at other people's pricing decisions is a type of heuristic - a decisionmaking rule - that people use even when it is not applicable, as in the case of clearly private value goods. We find evidence that this is indeed the case - an individual's valuation of a purely subjective experience under full information, elicited using an incentive compatible mechanism, is highly influence by valuations made by others. This result can shed light on price behavior, price rigidities, and rents.

Suggested Citation

  • Dan Ariely & Anat Bracha & Jean-Paul L'Huillier, 2010. "Public and private values," Working Papers 10-5, Federal Reserve Bank of Boston.
  • Handle: RePEc:fip:fedbwp:10-5
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    File URL: http://www.bostonfed.org/economic/wp/wp2010/wp1005.htm
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    File URL: http://www.bostonfed.org/economic/wp/wp2010/wp1005.pdf
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    References listed on IDEAS

    as
    1. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October.
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    Keywords

    Pricing ; Human behavior;

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