Featured Research

from universities, journals, and other organizations

From teddy bears to iPhones, we overestimate what others will pay for goods

Date:
December 14, 2011
Source:
University of Chicago Press Journals
Summary:
Compared to what they would pay themselves, most consumers overestimate what others are willing to pay for products, according to a new study. And that holds true for a large range of items, both real and imaginary.

Compared to what they would pay themselves, most consumers overestimate what others are willing to pay for products, according to a new study in the Journal of Consumer Research. And that holds true for a large range of items, both real and imaginary.

Related Articles


"People typically overestimate the average willingness to pay in a population, and correspondingly, typically believe that others -- even a specific person sitting next to them -- will pay more," writes author Shane Frederick (Yale University). Frederick found that the average MBA student in his class was willing to pay $27 for the DVDs of the first four seasons of the "Sopranos," but on average those same students estimated that other people would pay $40.

In another experiment, Frederick randomly assigned students to partners and had them bid on items and estimate others' bids. Seventeen out of twenty-one students predicted that the other person would bid more than they themselves would.

"The documented bias appears to hold for all goods," Frederick writes. "It was found not just for DVDs, but also for chocolate truffles, books, teddy bears, sporting goods, iPhones, artwork, and even hypothetical or imaginary goods such as a trip to the moon or a magic pill that confers the ability to speak French."

The author found an average (and robust) bias of +40 percent, which held across a wide range of undergraduates, MBAs, respondents to an online survey broadly representing the U.S. population, and summer picnickers in Boston.

The bias disappears when valuations are measured by non-monetary payments (such as the number of pencils one would be willing to sharpen to acquire a good). The author believes this signifies that many people fail to appreciate others' feelings about spending money.

This overvaluing bias may lead to a tendency for sellers to set prices too high, or for difficulty in negotiation when consumers and sellers have disparate valuations, the author concludes.


Story Source:

The above story is based on materials provided by University of Chicago Press Journals. Note: Materials may be edited for content and length.


Journal Reference:

  1. Overestimating How Much Others Will Pay for Goods. Shane Frederick. Journal of Consumer Research, June 2012 DOI: 10.1086/662060

Cite This Page:

University of Chicago Press Journals. "From teddy bears to iPhones, we overestimate what others will pay for goods." ScienceDaily. ScienceDaily, 14 December 2011. <www.sciencedaily.com/releases/2011/12/111213110523.htm>.
University of Chicago Press Journals. (2011, December 14). From teddy bears to iPhones, we overestimate what others will pay for goods. ScienceDaily. Retrieved January 27, 2015 from www.sciencedaily.com/releases/2011/12/111213110523.htm
University of Chicago Press Journals. "From teddy bears to iPhones, we overestimate what others will pay for goods." ScienceDaily. www.sciencedaily.com/releases/2011/12/111213110523.htm (accessed January 27, 2015).

Share This


More From ScienceDaily



More Mind & Brain News

Tuesday, January 27, 2015

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

How Technology Is Ruining Snow Days For Students

How Technology Is Ruining Snow Days For Students

Newsy (Jan. 25, 2015) More schools are using online classes to keep from losing time to snow days, but it only works if students have Internet access at home. Video provided by Newsy
Powered by NewsLook.com
Weird Things Couples Do When They Lose Their Phone

Weird Things Couples Do When They Lose Their Phone

BuzzFeed (Jan. 24, 2015) Did you back it up? Do you even know how to do that? Video provided by BuzzFeed
Powered by NewsLook.com
Smart Wristband to Shock Away Bad Habits

Smart Wristband to Shock Away Bad Habits

Reuters - Innovations Video Online (Jan. 23, 2015) A Boston start-up is developing a wristband they say will help users break bad habits by jolting them with an electric shock. Ben Gruber reports. Video provided by Reuters
Powered by NewsLook.com
Amazing Technology Allows Blind Mother to See Her Newborn Son

Amazing Technology Allows Blind Mother to See Her Newborn Son

RightThisMinute (Jan. 23, 2015) Not only is Kathy seeing her newborn son for the first time, but this is actually the first time she has ever seen a baby. Kathy and her sister, Yvonne, have been legally blind since childhood, but thanks to an amazing new technology, eSight glasses, which gives those who are legally blind the ability to see, she got the chance to see the birth of her son. It&apos;s an incredible moment and an even better story. Video provided by RightThisMinute
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:

Strange & Offbeat Stories


Health & Medicine

Mind & Brain

Living & Well

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins