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Re-examining coherent arbitrariness for the evaluation of common goods and simple lotteries

Number: 34
Year: 2010
Author(s): Drew Fudenberg, David K. Levine, Zacharias Maniadis
Keywords: preferences,anchoring,willingness to pay,Becker-DeGroot-Marschak mechanism
The assumption that people make decisions based on a constant set of preferences, so that choices should not depend on context-specific cues (anchors), is one of the cornerstones of economic theory. We reexamined the effects of an anchoring manipulation on the valuation of common market goods that was introduced in Ariely, Lowenstein and Prelec (2003). We found much weaker anchoring effects. We performed the same manipulation on the evaluation of binary lotteries, and we found no anchoring effects. This suggests limits on the robustness of strong anchoring effects. Hence, the evidence that people have arbitrary preferences may not be conclusive, and economic theory may still be valid in many cases of interest.

Drew Fudenberg

Harvard University, Department of Economics


David K. Levine

Washington University St. Louis, Department of Economics


Zacharias Maniadis

Universita Bocconi, Dondena Centre for Reserach on Social Dynamics




Keywords: preferences, anchoring, willingness to pay, Becker-DeGroot-Marschak mechanism


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