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Overestimating Others’ Willingness to Pay

Shane Frederick
Journal of Consumer Research
Vol. 39, No. 1 (June 2012), pp. 1-21
Published by: Oxford University Press
DOI: 10.1086/662060
Stable URL: http://www.jstor.org/stable/10.1086/662060
Page Count: 21
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Overestimating Others’ Willingness to Pay
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Abstract

This article documents a widespread bias: a tendency to overestimate how much others will pay for goods. The effect may influence pricing and negotiations, which depend on accurate assessments of others’ valuations. It is also shown to underlie or interact with several widely researched behavioral phenomena, including egocentric empathy gaps, the endowment effect, and the false-consensus effect.

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