The Psychology of Perceived Value

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This dissertation examines how people assess the value of products, and how this process affects market prices and consumer well-being. I begin by examining how people estimate the economic value of products, specifically the heuristic processes and biases that underlie such estimation.Chapter 1 shows that subtle changes in product descriptions can render product valuations more experiential or more analytical in nature. In particular, merely making perceptual units (e.g., 12 snack bags) more salient than standardized units (e.g., 12 oz.) in quantity information makes valuations more experiential—even when objective information remains constant. Such experiential processing increases consumers’ willingness to pay and, accordingly, retailers charge higher market prices when they sell products described in perceptual units. Chapter 2 examines how individuals estimate willingness to pay (WTP) in consumer surveys, a question that is central to both practitioners and researchers. I show that the amount that respondents are willing to pay for a product is systematically lower than the actual prices that shoppers would pay in the marketplace. I delineate two distinct heuristic processes that individuals use to assess WTP estimates, preference-based WTP estimation and reference-based WTP estimation. I show that reference-based valuations are closer to market prices. Chapter 3 investigates the psychological tenets of the valuation of a distinct class of products that are understudied yet important for consumers’ well-being: self-made goods. I document that the feeling of groundedness—a feeling of emotional rootedness—is an important reason why individuals value self-made goods more than equivalent ready-made ones. Individuals who make things themselves experience increased feelings of groundedness, and subsequently feel stronger, safer, and more stable. Conversely, experiencing higher need for groundedness (e.g., when one’s foundations are shaken) makes people engage in do-it-yourself (DIY) activities more. Overall, this dissertation examines both economic and psychological implications of how people assess the value of products, and shows that value assessment is essentially heuristic in nature, which renders it susceptible to various contextual factors. How individuals form product valuation has a substantial impact on market prices and consumer well-being.

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144 pages


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Behavioral pricing; Groundedness; Perceived Value; Psychology; Quantity Description; Willingness-to-pay


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Thomas, Manoj

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Pizarro, David A.
van Osselaer, Stijn

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Ph. D., Management

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Doctor of Philosophy

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dissertation or thesis

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