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Prospect theory and pricing decisions
Article
Urbany, JE, Dickson, PR. (1990). Prospect theory and pricing decisions .
19(1), 69-80. 10.1016/0090-5720(90)90018-3
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Urbany, JE, Dickson, PR. (1990). Prospect theory and pricing decisions .
19(1), 69-80. 10.1016/0090-5720(90)90018-3
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Overview
cited authors
Urbany, JE; Dickson, PR
authors
Dickson, Peter
abstract
Kahneman and Tversky's well-known prospect theory predicts that decision-makers will predominantly take the sure thing when choosing between a sure gain and a risky gain of equal or better expected value. We find that, when a price cut decision is presented in a form similar to the prospect theory gamble problems, the majority of respondents (both students and retailers) choose the risky price cut choice, even when the risky choice has a lower expected value. The explanation that perceived short term gains in volume (i.e., the customer base) dominated the price cut decision is examined in detail. © 1990.
publication date
January 1, 1990
Identifiers
Digital Object Identifier (DOI)
https://doi.org/10.1016/0090-5720(90)90018-3
Additional Document Info
start page
69
end page
80
volume
19
issue
1