Public and Private Values

9 Pages Posted: 2 Jul 2010

See all articles by Dan Ariely

Dan Ariely

Duke University - Fuqua School of Business

Anat Bracha

The Federal Reserve Bank of Boston

Jean-Paul L'Huillier

Massachusetts Institute of Technology (MIT)

Date Written: June 28, 2010

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.

JEL Classification: J64, E24, J11

Suggested Citation

Ariely, Dan and Bracha, Anat and L'Huillier, Jean-Paul, Public and Private Values (June 28, 2010). FRB of Boston Working Paper No. 10-5. Available at SSRN: https://ssrn.com/abstract=1633955 or http://dx.doi.org/10.2139/ssrn.1633955

Dan Ariely

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
(919) 381-4366 (Phone)

Anat Bracha (Contact Author)

The Federal Reserve Bank of Boston ( email )

600 Atlantic Ave.
Boston, MA 02210
United States

HOME PAGE: http://https://sites.google.com/site/anatbracha/

Jean-Paul L'Huillier

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

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