Why do we overestimate others' willingness to pay?
People typically overestimate how much others are prepared to pay for consumer goods and services. We investigated the extent to which latent beliefs about others’ affluence contribute to this overestimation. In Studies 1, 2a, and 2b we found that participants, on average, judge the other people tak...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Cambridge University Press
2016-01-01
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| Series: | Judgment and Decision Making |
| Subjects: | |
| Online Access: | http://journal.sjdm.org/15/15909/jdm15909.pdf |
| _version_ | 1797715959651237888 |
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| author | William J. Matthews Ana I. Gheorghiu Mitchell J. Callan |
| author_facet | William J. Matthews Ana I. Gheorghiu Mitchell J. Callan |
| author_sort | William J. Matthews |
| collection | DOAJ |
| description | People typically
overestimate how much others are prepared to pay for consumer goods and
services. We investigated the extent to which latent beliefs about others’
affluence contribute to this overestimation. In Studies 1, 2a, and 2b we found
that participants, on average, judge the other people taking part in the study
to “have more money” and “have more disposable income” than themselves. The
extent of these beliefs positively correlated with the overestimation of
willingness to pay (WTP). Study 3 shows that the link between income-beliefs
and WTP is causal, and Studies 4, 5a, and 5b show that it holds in a
between-group design with a real financial transaction and is unaffected by
accuracy incentives. Study 6 examines estimates of others’ income in more
detail and, in conjunction with the earlier studies, indicates that
participants’ reported beliefs about others’ affluence depend upon the framing
of the question. Together, the data indicate that individual differences in the
overestimation effect are partly due to differing affluence-beliefs, and that
an overall affluence-estimation bias may contribute to the net tendency to
overestimate other people’s willingness to pay. |
| first_indexed | 2024-03-12T08:14:31Z |
| format | Article |
| id | doaj.art-0ff45fcb9e9347698e4b0da8da4253a8 |
| institution | Directory Open Access Journal |
| issn | 1930-2975 |
| language | English |
| last_indexed | 2024-03-12T08:14:31Z |
| publishDate | 2016-01-01 |
| publisher | Cambridge University Press |
| record_format | Article |
| series | Judgment and Decision Making |
| spelling | doaj.art-0ff45fcb9e9347698e4b0da8da4253a82023-09-02T18:58:12ZengCambridge University PressJudgment and Decision Making1930-29752016-01-011112139Why do we overestimate others' willingness to pay?William J. MatthewsAna I. GheorghiuMitchell J. CallanPeople typically overestimate how much others are prepared to pay for consumer goods and services. We investigated the extent to which latent beliefs about others’ affluence contribute to this overestimation. In Studies 1, 2a, and 2b we found that participants, on average, judge the other people taking part in the study to “have more money” and “have more disposable income” than themselves. The extent of these beliefs positively correlated with the overestimation of willingness to pay (WTP). Study 3 shows that the link between income-beliefs and WTP is causal, and Studies 4, 5a, and 5b show that it holds in a between-group design with a real financial transaction and is unaffected by accuracy incentives. Study 6 examines estimates of others’ income in more detail and, in conjunction with the earlier studies, indicates that participants’ reported beliefs about others’ affluence depend upon the framing of the question. Together, the data indicate that individual differences in the overestimation effect are partly due to differing affluence-beliefs, and that an overall affluence-estimation bias may contribute to the net tendency to overestimate other people’s willingness to pay.http://journal.sjdm.org/15/15909/jdm15909.pdfwillingness to pay wealth-beliefs overestimation better-than-average effect.NAKeywords |
| spellingShingle | William J. Matthews Ana I. Gheorghiu Mitchell J. Callan Why do we overestimate others' willingness to pay? Judgment and Decision Making willingness to pay wealth-beliefs overestimation better-than-average effect.NAKeywords |
| title | Why do we
overestimate others' willingness to pay? |
| title_full | Why do we
overestimate others' willingness to pay? |
| title_fullStr | Why do we
overestimate others' willingness to pay? |
| title_full_unstemmed | Why do we
overestimate others' willingness to pay? |
| title_short | Why do we
overestimate others' willingness to pay? |
| title_sort | why do we overestimate others willingness to pay |
| topic | willingness to pay wealth-beliefs overestimation better-than-average effect.NAKeywords |
| url | http://journal.sjdm.org/15/15909/jdm15909.pdf |
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