IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v231y2025ics0167268125000472.html
   My bibliography  Save this article

Price expectations and reference-dependent preferences

Author

Listed:
  • Rutledge, Robert M.
  • Alladi, Vinayak
  • Cheung, Stephen L.

Abstract

We test Kőszegi and Rabin's (2006, 2007) theory of reference-dependent preferences in the context of sellers’ price expectations. In a well-powered laboratory experiment, participants are endowed with a good and report their willingness to accept to sell it. We manipulate the price in an exogenous forced sale scenario, which is predicted to produce a “comparison effect”, moving WTA in the opposite direction to the forced sale price. We find a small (Cohen's d=0.18) and marginally significant effect in the hypothesised direction for incentivised reservation prices. More unexpectedly, we find a larger (d=0.32) and highly significant effect in the same direction on unincentivised estimates of the value of the good. Our results cannot be explained by anchoring or signalling effects of the forced sale price, but also highlight some challenges in identifying the effects of expectations manipulations using valuation designs.

Suggested Citation

  • Rutledge, Robert M. & Alladi, Vinayak & Cheung, Stephen L., 2025. "Price expectations and reference-dependent preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 231(C).
  • Handle: RePEc:eee:jeborg:v:231:y:2025:i:c:s0167268125000472
    DOI: 10.1016/j.jebo.2025.106927
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268125000472
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.jebo.2025.106927?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Price expectations; Comparison effect; Loss aversion;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:231:y:2025:i:c:s0167268125000472. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jebo .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.