“People typically overestimate the average willingness to pay in a population, and correspondingly, typically believe that others\u00e2\u20ac\u201deven a specific person sitting next to them\u00e2\u20ac\u201dwill pay more<\/strong>,” 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.<\/p>\n 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.<\/p>\n “The documented bias appears to hold for all goods<\/strong>,” 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.<\/strong>”<\/p>\n 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.<\/p>\n 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.<\/strong><\/p>\n 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.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":" From the University of Chicago Press Journals via EurekAlert!: Compared to what they would pay themselves, most consumers overestimate what others are willing to pay for products, according to a… Read more »<\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5],"tags":[96,364,156],"_links":{"self":[{"href":"https:\/\/therapytoronto.ca\/news\/wp-json\/wp\/v2\/posts\/376"}],"collection":[{"href":"https:\/\/therapytoronto.ca\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/therapytoronto.ca\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/therapytoronto.ca\/news\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/therapytoronto.ca\/news\/wp-json\/wp\/v2\/comments?post=376"}],"version-history":[{"count":2,"href":"https:\/\/therapytoronto.ca\/news\/wp-json\/wp\/v2\/posts\/376\/revisions"}],"predecessor-version":[{"id":379,"href":"https:\/\/therapytoronto.ca\/news\/wp-json\/wp\/v2\/posts\/376\/revisions\/379"}],"wp:attachment":[{"href":"https:\/\/therapytoronto.ca\/news\/wp-json\/wp\/v2\/media?parent=376"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/therapytoronto.ca\/news\/wp-json\/wp\/v2\/categories?post=376"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/therapytoronto.ca\/news\/wp-json\/wp\/v2\/tags?post=376"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"http:\/\/therapytoronto.ca\/news\/wp-content\/uploads\/2011\/12\/Shopping3.jpg\" "\\"Shopping3\\"")
<\/a>Compared to what they would pay themselves, most consumers overestimate what others are willing to pay for products<\/strong>, according to a new study in the Journal of Consumer Research<\/em>. And that holds true for a large range of items, both real and imaginary.<\/p>\n