Narratives and Valuations

Abstract

While the significance of narrative thinking has become increasingly recognized by economists, very little empirical research has documented its consequences for economically significant outcomes. We address this gap in one important domain: valuations. In two online experiments, participants either told the story of an item they owned (mug in study 1, hat in 2) or listed its characteristics and were then offered the opportunity to sell it via an incentive-compatible procedure. The narrative treatment led to substantially higher selling prices (33% increase on average) and unwillingness to sell rates (78% increase). The impact of different narrative types was also explored.

Keywords: Decision-Making, Narratives, Stories, Valuations, Willingness to Accept, Item Attachment

JEL Classification: D91, C93