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Federal Reserve Bank of Boston
Working Papers
Public and private values
Dan Ariely
Anat Bracha
Jean-Paul L'Huillier
Abstract

This paper experimentally examines whether looking at other people's pricing decisions is a type of heuristic - a decisionmaking rule - that people use even when it is not applicable, as in the case of clearly private value goods. We find evidence that this is indeed the case - an individual's valuation of a purely subjective experience under full information, elicited using an incentive compatible mechanism, is highly influence by valuations made by others. This result can shed light on price behavior, price rigidities, and rents.


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Dan Ariely & Anat Bracha & Jean-Paul L'Huillier, Public and private values, Federal Reserve Bank of Boston, Working Papers 10-5, 2010.
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Keywords: Pricing ; Human behavior
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