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Diminishing Marginal Value

Author

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  • Horowitz, John K.
  • List, John A.
  • McConnell, Kenneth E.

Abstract

The notion of diminishing marginal value has had a profound impact on the development of neoclassical theory. Early neoclassical scholars had considerable difficulty convincing contemporaries of the new paradigm's value until political economists, including Jevons and Walras, used the critical assumption of diminishing marginal value to link utility and demand. While diminishing marginal value remains a key component of modern economic intuition, there is surprisingly little empirical verification of its existence or level. This paper gathers field data across a myriad of subject pools--from undergraduate students to PTA members to sportscard enthusiasts--to examine several aspects of preferences in both price and exchange institutions. Examining behavior of nearly 900 subjects across several treatments, we find strong evidence of diminishing marginal value.

Suggested Citation

  • Horowitz, John K. & List, John A. & McConnell, Kenneth E., 2004. "Diminishing Marginal Value," 2004 Annual meeting, August 1-4, Denver, CO 20297, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea04:20297
    DOI: 10.22004/ag.econ.20297
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    References listed on IDEAS

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    Cited by:

    1. Ponce, Aldo F, 2013. "What Do Parties Do in Congress? Explaining the Allocation of Legislative Specialization," MPRA Paper 46573, University Library of Munich, Germany.

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