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

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Abstract

Several 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.

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Item Type:	Journal Article
Subjects:	H Social Sciences > HB Economic Theory
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Value, Pricing, Loss aversion
Journal or Publication Title:	Theory and Decision
Publisher:	Springer Netherlands
ISSN:	0040-5833
Date:	September 2011
Volume:	Vol.71
Number:	No.3
Page Range:	pp. 409-430
Identification Number:	10.1007/s11238-010-9207-6
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access
Funder:	Economic and Social Research Council (Great Britain) (ESRC)
Grant number:	PT-030-2005-00035 (ESRC)
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URI:	http://wrap.warwick.ac.uk/id/eprint/38759

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