Manipulating Perception: The Effect of Product Similarity on Valuations and Markets

Andreas Gotfredsen, Carsten S. Nielsen, Alexander C. Sebald*, Edward J.D. Webb

*Corresponding author af dette arbejde

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Abstrakt

We study the economic impact of perceptual limitations using experimental goods for which the difficulty of perceiving the difference between them can be manipulated by altering the similarity of their visual representation. In our first experiment, we found that subjects’ willingness-to-pay for goods became more similar when it was harder to discriminate between them. Building on this result, we ran a second experiment where the same experimental goods were traded in a market with heterogeneous buyer preferences and seller market power. Buyers were less likely to choose the option which maximises consumer surplus when discriminating between products was harder, and buyer payoffs were lower. We find indications that buyers used a different method of constructing their valuations in the market than in individual choice, and there was weak evidence that using different methods were beneficial for buyers. Seller prices and profits were not dependent on how easy it was for buyers to discriminate between goods.
OriginalsprogEngelsk
TidsskriftJournal of Economic Behavior and Organization
Vol/bind190
Sider (fra-til)263-286
Antal sider24
ISSN0167-2681
DOI
StatusUdgivet - okt. 2021
Udgivet eksterntJa

Emneord

  • Perception
  • Similarity
  • Bounded rationality
  • Willingness-to-pay
  • Posted offer market
  • Experimental economics

Citationsformater