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The Transaction Index: A Method for Standardizing Comparisons of Transaction Characteristics Across Different Contexts

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  • Jennifer Halpern

Abstract

This article develops a transaction index (TI), a new method that facilitates comparisons of pricing behavior between reference and target groups of transactors across different types of transactions. The TI compares the target price, derived from the target group, to a transaction zone, which is a range of plausible prices in a negotiation established by the reference groups. These two groups should be conceptually related, for example, through a social association. Statistically, the index can bring transactions at widely differing price levels to a common level and standardize price volatility to facilitate comparisons across transactions. Conceptually, it incorporates a comparison of two groups into a single measure so that their relationship can be analyzed in terms of other variables. An application of a TI to friends' and strangers' pricing decisions reveals richer associations than those observed through more traditional analytic approaches.

Suggested Citation

  • Jennifer Halpern, 1997. "The Transaction Index: A Method for Standardizing Comparisons of Transaction Characteristics Across Different Contexts," Group Decision and Negotiation, Springer, vol. 6(6), pages 557-572, December.
    • Handle: RePEc:spr:grdene:v:6:y:1997:i:6:d:10.1023_a:1008640426690
    DOI: 10.1023/A:1008640426690
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    References listed on IDEAS

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    1. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard H, 1986. "Fairness and the Assumptions of Economics," The Journal of Business, University of Chicago Press, vol. 59(4), pages 285-300, October.
    2. Paul M. Hirsch, 1990. "Rational Choice Models for Sociology — Pro and Con," Rationality and Society, , vol. 2(2), pages 137-141, April.
    3. Jennifer J. Halpern, 1994. "The Effect of Friendship on Personal Business Transactions," Journal of Conflict Resolution, Peace Science Society (International), vol. 38(4), pages 647-664, December.
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