From: rhinoceros (rhinoceros@freemail.gr)
Date: Sun Mar 28 2004 - 12:51:56 MST
Buy High, Sell Low -- Emotions Turn Economic Decisions on Their Head, Says Carnegie Mellon Study
http://www.cmu.edu/PR/releases04/040301_buyandsell.html
PITTSBURGH—Seemingly incidental emotions can influence the prices at which individuals buy and sell goods, according to a groundbreaking study by researchers at Carnegie Mellon University.
While prior research has found that people set a higher price for objects they own than they themselves would be willing to pay—which economists call the endowment effect—the Carnegie Mellon study found that people who are sad actually are willing to accept less money to sell something than they would pay for the same object. The researchers also found that when people experience disgust, both buying and selling prices fall.
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The researchers concluded that sadness triggered an implicit need for individuals to change their circumstances, thus a greater willingness to buy new goods or to sell goods that they already had, while disgust made people want to get rid of what they had and made them reluctant to take on anything new, depressing all prices. When asked whether emotion played a role in their decisions, participants said no, indicating that they were unaware that their emotional state could be costing them money. The researchers already have replicated their results in another experiment.
"As a developing field, we're now increasingly able to predict non-intuitive ways in which emotions exert their effects. And we can document that incidental emotions matter even when real money is at stake," Lerner said.
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