טכניון מכון טכנולוגי לישראל
הטכניון מכון טכנולוגי לישראל - בית הספר ללימודי מוסמכים  
Ph.D Thesis
Ph.D StudentAbofol Taher
SubjectThe Seller's Sense: Buying-Selling Perspective Affects
the Sensitivity to Expected-Value Differences
DepartmentDepartment of Industrial Engineering and Management
Supervisor Professor Eldad Yechiam
Full Thesis textFull thesis text - English Version


Abstract

In six studies, we examined whether sellers and buyers differ not only in subjective price levels for objects (i.e., the endowment effect) but also in their relative accuracy given objects varying in expected value. If, as has been proposed, sellers stand to accrue a more substantial loss than buyers do, then their pricing decisions should be more sensitive to expected-value differences between objects. This is implied by loss aversion due to the steeper slope of prospect theory’s value function for losses than for gains, as well as by loss attention account, which posits that losses increase the attention invested in a task. Both accounts suggest that losses increase sensitivity to relative values of different objects, which should result in better alignment of pricing decisions to the objective value of objects on the part of sellers. Under loss attention, this characteristic should only emerge under certain boundary conditions. In Study 1 and 2 we reanalyzed two published datasets in which participants priced monetary lotteries as sellers or buyers. It emerged that sellers indicated prices that were better aligned with the ranking of the lotteries’ expected value in 6 out of 7 studied conditions. The discrepancy in accuracy disappeared in a condition with an extended deliberation time of 15 seconds. Study 3 replicated the design of study 1 but administered the task three times to test if the effect decays with repeated presentation. The results showed that the difference between buyers and sellers’ EV sensitivity was replicated in repeated task presentations. Study 4 examined the loss attention prediction that EV-sensitivity differences can be eliminated by manipulations that reduce the differential attention investment of sellers and buyers. This was carried out by randomly mixing selling and buying trials for each participant. The results revealed no differences in EV sensitivity between selling and 2 buying trials. Study 5 highlighted the robustness of the seller's sense phenomenon by replicating the seller's accuracy advantage in different paradigm. In study 6, we have measured the arousal level of sellers and buyers through recording their pupils' diameter. Loss attention predicts that sellers will have larger pupil's diameter because they accrue larger loss than buyer's, on the contrary of the loss attention prediction , we didn't find difference in the pupil diameter of sellers and buyers. However we have succeed to replicate the sellers’ accuracy advantage. The pattern of the behavioral results is consistent with an attentional resource-based account of the differences between sellers and buyers.