The willingness-to-accept/willingness-to-pay disparity in repeated markets : loss aversion or 'bad-deal' aversion?
Isoni, Andrea (2011) The willingness-to-accept/willingness-to-pay disparity in repeated markets : loss aversion or 'bad-deal' aversion? Theory and Decision, Vol.71 (No.3). pp. 409-430. ISSN 0040-5833 Official URL: http://dx.doi.org/10.1007/s11238-010-9207-6 AbstractSeveral experimental studies have reported that an otherwise robust regularity-the disparity between Willingness-To-Accept and Willingness-To-Pay-tends to be greatly reduced in repeated markets, posing a serious challenge to existing reference-dependent and reference-independent models alike. This article offers a new account of the evidence, based on the assumptions that individuals are affected by good and bad deals relative to the expected transaction price (price sensitivity), with bad deals having a larger impact on their utility ('bad-deal' aversion). These features of preferences explain the existing evidence better than alternative approaches, including the most recent developments of loss aversion models. | Item Type: | Journal Article |
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| Subjects: | H Social Sciences > HB Economic Theory |
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| Divisions: | Faculty of Social Sciences > Economics |
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| Library of Congress Subject Headings (LCSH): | Value, Pricing, Loss aversion |
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| Journal or Publication Title: | Theory and Decision |
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| Publisher: | Springer Netherlands |
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| ISSN: | 0040-5833 |
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| Date: | September 2011 |
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| Volume: | Vol.71 |
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| Number: | No.3 |
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| Page Range: | pp. 409-430 |
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| Identification Number: | doi:10.1007/s11238-010-9207-6 |
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| Status: | Peer Reviewed |
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| Publication Status: | Published |
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| Access rights to Published version: | Restricted or Subscription Access |
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| Funder: | Economic and Social Research Council (Great Britain) (ESRC) |
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| Grant number: | PT-030-2005-00035 (ESRC) |
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