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Temptation in purchasing decision: A Quasi Experiment to Validate the Set Betweenness axiom

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  • Reddy Sai Shiva

    (Indian Institute of Management Kozhikode)

  • Kausik Gangopadhyay

    (Indian Institute of Management Kozhikode)

Abstract

We examined the Set Betweenness axiom, the most crucial assumption in the literature studying Temptation and Self-control starting with the seminal work by Gul and Pessendorfer [1]. This axiom states that presence of a tempting alternative creates a self-control problem for the decision maker who prefers a menu that does not include the tempting alternative over a menu that does. We identified reduced price as a tempting alternative and conducted a quasi-experiment on 288 respondents. The respondents expressed their preference between menus or alternatives that contains a tempting good at a reduced price and/or that good at a non-reduced price. We chose ice cream and shirt as two different choices for goods. Our results demonstrate that that choice that is consistent with Set Betweenness Axiom is the most observed choice. Moreover, people with more familial wealth may have higher preference for commitment.

Suggested Citation

  • Reddy Sai Shiva & Kausik Gangopadhyay, 2018. "Temptation in purchasing decision: A Quasi Experiment to Validate the Set Betweenness axiom," Working papers 268, Indian Institute of Management Kozhikode.
    • Handle: RePEc:iik:wpaper:268
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    References listed on IDEAS

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    1. Faruk Gul & Wolfgang Pesendorfer, 2004. "Self Control, Revealed Preferences and Consumption Choice," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(2), pages 243-264, April.
    2. John Ameriks & Andrew Caplin & John Leahy & Tom Tyler, 2007. "Measuring Self-Control Problems," American Economic Review, American Economic Association, vol. 97(3), pages 966-972, June.
    3. Faruk Gul & Wolfgang Pesendorfer, 2001. "Temptation and Self-Control," Econometrica, Econometric Society, vol. 69(6), pages 1403-1435, November.
    4. Houser, Daniel & Schunk, Daniel & Winter, Joachim & Xiao, Erte, 2018. "Temptation and commitment in the laboratory," Games and Economic Behavior, Elsevier, vol. 107(C), pages 329-344.
    5. Jawwad Noor, 2011. "Temptation and Revealed Preference," Econometrica, Econometric Society, vol. 79(2), pages 601-644, March.
    6. Kevin X.D. Huang & Zheng Liu & John Qi Zhu, 2015. "Temptation and Self‐Control: Some Evidence and Applications," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(4), pages 581-615, June.
    7. Noor, Jawwad, 2007. "Commitment and self-control," Journal of Economic Theory, Elsevier, vol. 135(1), pages 1-34, July.
    8. Hicken, Allen & Leider, Stephen & Ravanilla, Nico & Yang, Dean, 2018. "Temptation in vote-selling: Evidence from a field experiment in the Philippines," Journal of Development Economics, Elsevier, vol. 131(C), pages 1-14.
    9. Woźny, Łukasz, 2015. "On incentives, temptation and self-control," Mathematical Social Sciences, Elsevier, vol. 74(C), pages 60-67.
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