Inattention and Prices Over Time: Experimental Evidence from 'The Price Is Right' (1972-2019)

13 Pages Posted: 26 Oct 2019

See all articles by Jonathan Hartley

Jonathan Hartley

Harvard University, Harvard Kennedy School (HKS), Students

Date Written: October 11, 2019

Abstract

This paper uses nearly five decades of data from "The Price Is Right", the longest running gameshow in television history, as a natural experiment to understand how attention to prices has changed in recent decades. Using nearly 30,000 trials (120,000 bids) of the one-bid “Contestant’s Row” game from 1972 to 2019, contestants have increasingly underestimated the true price of the good over time with an increasingly greater magnitude, suggesting that individuals have become more inattentive to prices. These bid deviations are correlated with inflation expectations which could potentially be the result of sustained periods of low inflation or the introduction of new technology that diminish the benefit of acquiring and retaining such price information. These results have several implications for the formation of inflation expectations and price dynamics.

Keywords: Inattention, Natural Experiments, Prices, Inflation, Behavioral Macroeconomics

JEL Classification: C9, E3, E7

Suggested Citation

Hartley, Jonathan, Inattention and Prices Over Time: Experimental Evidence from 'The Price Is Right' (1972-2019) (October 11, 2019). Available at SSRN: https://ssrn.com/abstract=3469008 or http://dx.doi.org/10.2139/ssrn.3469008

Jonathan Hartley (Contact Author)

Harvard University, Harvard Kennedy School (HKS), Students ( email )

Cambridge, MA
United States

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