(Press-News.org) Consumers systematically mispredict both the selling and purchase prices of other consumers due to a lack of cognitive and emotional connection, according to a new study in the Journal of Consumer Research.
"As sellers, consumers fail to appreciate the extent to which endowment and the prospect of giving up an object and not getting to enjoy its benefits influence other owner valuations. On the other hand, as buyers, consumers fail to realize the extent to which lack of ownership and the prospect of giving up money to purchase an object impact other buyer valuations," write authors Didem Kurt (Boston University) and J. Jeffrey Inman (University of Pittsburgh).
In one study, a group of consumers was given coffee mugs (owners) and asked to predict how much others would ask for the mug. Another group who were not given mugs (buyers) was asked to estimate how much others would pay for the mug. Both groups failed to predict the prices of others in the same role. Owners underestimated the average selling price demanded by other owners, whereas buyers overestimated the average price offered by other buyers by over 20%.
These biases can have important economic implications. For instance, when demand for homes is high in an area, buyers may overestimate how much others are willing to pay for a particular home and place a very high bid, resulting in overpaying. Buyers will suffer from reduced satisfaction with a transaction when they discover that others are actually willing to pay less (or have already paid less) for the same or a similar object. Or, when selling used items of sentimental value, underestimating the selling prices of other owners may lead an owner to sell at a lower price, reducing not only the economic benefit of the sale but also decreasing the seller's overall satisfaction.
"Consumers rely on both their calculations and feelings when valuing objects for sale. And, since consumers inaccurately assess others' cognitive and emotional states, they mispredict how much others value objects. However, the accuracy of their predictions can be improved by helping them appreciate similarities between themselves and others who are in the same situation," the authors conclude.
### Didem Kurt and J. Jeffrey Inman. "Mispredicting Others' Valuations: Self-Other Difference in the Context of Endowment." Journal of Consumer Research: June 2013. For more information, contact Jeff Inman (jinman@katz.pitt.edu) or visit http://ejcr.org/.
The housing market: Consumers struggle to get the price right
2013-01-15
ELSE PRESS RELEASES FROM THIS DATE:
Fashion blogs: How do ordinary consumers harness social media to become style leaders?
2013-01-15
The Internet has given consumers the unprecedented opportunity to reach a mass audience and thereby advance their social position through displays of good taste, according to a new study in the Journal of Consumer Research.
"Ordinary consumers were previously limited to sharing their views and tastes within their circle of friends and acquaintances, and only media professionals and others in powerful positions could reach a mass audience. But the Internet has made it possible for ordinary consumers to reach a mass audience or 'grab hold of the megaphone' through blogs, ...
Are consumers with fewer friends more likely to take financial risks?
2013-01-15
Feeling socially isolated causes consumers to pursue riskier but potentially more profitable financial opportunities, according to a new study in the Journal of Consumer Research.
"Seeking social acceptance and maintaining close relationships are among the most fundamental and universal human needs. Consumers are often willing to invest or sacrifice important resources to secure social bonds. In the absence of social support, consumers seek significantly more money to secure what they want out of the social system surrounding them. Feeling socially rejected triggers riskier ...
How does family life influence consumer response to television advertising?
2013-01-15
Family interaction and everyday activity strongly influence how television advertisements are experienced and interpreted at home, according to a new study in the Journal of Consumer Research.
"It is common to link advertising viewing at home to increased levels of materialism and domestic tension stemming from 'pester power' (children getting parents to buy something by asking for it repeatedly until they get it). While these are serious issues, we have found that creative and skilled viewers of television advertising in the family living room can overturn and personalize ...
Don't read my lips! Body language trumps the face for conveying intense emotions
2013-01-15
Be it triumph or crushing defeat, exhilaration or agony, body language more accurately conveys intense emotions, according to recent research that challenges the predominance of facial expressions as an indicator of how a person feels.
Princeton University researchers report in the journal Science that facial expressions can be ambiguous and subjective when viewed independently. The researchers asked study participants to determine from photographs if people were experiencing feelings such as loss, victory or pain from facial expressions or body language alone, or from ...
Major step toward an Alzheimer's vaccine
2013-01-15
This press release is available in French. Quebec City, January 15, 2013—A team of researchers from Université Laval, CHU de Québec, and pharmaceutical firm GlaxoSmithKline (GSK) has discovered a way to stimulate the brain's natural defense mechanisms in people with Alzheimer's disease. This major breakthrough, details of which are presented today in an early online edition of the Proceedings of the National Academy of Sciences (PNAS), opens the door to the development of a treatment for Alzheimer's disease and a vaccine to prevent the illness.
One of the main characteristics ...
Youth mentoring linked to many positive effects, new CAMH and Big Brothers Big Sisters study shows
2013-01-15
Toronto, January 15, 2013 –The Centre for Addiction and Mental Health (CAMH) and Big Brothers Big Sisters Canada (BBBSC) are releasing the first results of one of the largest mentoring studies ever conducted.
The five-year study, which tracks the experiences of almost 1,000 children and teenagers registered with Big Brothers Big Sisters agencies across Canada, found that those with a mentor are significantly more confident in their academic abilities and considerably less likely to display behavioural problems.
One stand out finding is that girls in the study with ...
Claims of 'post-racial' society and other denials of racism may reflect ignorance of history
2013-01-15
New research suggests that commonly observed differences in how groups perceive racism may be explained by ignorance about — and even denial of — the extent of racism over the course of history.
The research, conducted by psychological scientists at the University of Kansas and Texas A&M University, indicates that African Americans had more accurate knowledge of historically documented racism compared to European Americans. This difference in historical knowledge partially accounted for group differences in perceptions of racism, both at a systemic and an incident-specific ...
Salmon runs boom, go bust over centuries
2013-01-15
Salmon runs are notoriously variable: strong one year, and weak the next. New research shows that the same may be true from one century to the next.
Scientists in the past 20 years have recognized that salmon stocks vary not only year to year, but also on decades-long time cycles. One example is the 30-year to 80-year booms and busts in salmon runs in Alaska and on the West Coast driven by the climate pattern known as the Pacific Decadal Oscillation.
Now work led by University of Washington researchers reveals those decadal cycles may overlay even more important, centuries-long ...
Scientists find a new way to boost common cancer drugs
2013-01-15
PHILADELPHIA, PA (January 14, 2013)—Shutting down a specific pathway in cancer cells appears to improve the ability of common drugs to wipe those cells out, according to new research from scientists at Fox Chase Cancer Center, published in the January issue of Cancer Discovery.
"Ideally, this research will eventually enable scientists to find drugs that disrupt this pathway and boost the impact of current therapies," says Igor Astsaturov, MD, PhD, Attending Physician in the Department of Medical Oncology at Fox Chase. "That's the long-term plan."
The new approach appears ...
Tissue engineers report knee cartilage repair success with new biomaterial
2013-01-15
In a small study, researchers reported increased healthy tissue growth after surgical repair of damaged cartilage if they put a "hydrogel" scaffolding into the wound to support and nourish the healing process. The squishy hydrogel material was implanted in 15 patients during standard microfracture surgery, in which tiny holes are punched in a bone near the injured cartilage. The holes stimulate patients' own specialized stem cells to emerge from bone marrow and grow new cartilage atop the bone.
Results of the study, published in the Jan. 9 issue of Science Translational ...