Effects of price of zero on decision making: An attempt to generalize human’s irrational behavior to price of zero

Atsuo Murata, Yasunari Matsushita, Makoto Moriwaka

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

When (a − 1)X = Z, the zero-price effect was observed only for (a: large, X: small) and (a: small, X: small). When X was small, the zero-price effect was observed irrespective of the value of a. When X was large, the zero-price effect was not observed. Human behavior tend to deviate from irrational behavior assumed in traditional economics for small values of X irrespective of a. The price of zero must be irrationally chosen due to the overestimation of price of zero. When (a − 1)X > Z, the zero-price effect was observed only for (a: large, X: large) and (a: large, X: small). When a was large, the zero-price effect was observed irrespective of whether X was large or small. When a was small, the zero-price effect was not observed. Human behavior tend to deviate from irrational behavior assumed in traditional economics for large values of a irrespective of the value of a. In this manner, it has been indicated that the zero-price effect is not necessarily observable and holds under limited conditions.

Original languageEnglish
Title of host publicationAdvances in Cross-Cultural Decision Making - Proceedings of the AHFE International Conference on Cross-Cultural Decision Making, CCDM 2016
PublisherSpringer Verlag
Pages109-116
Number of pages8
Volume480
ISBN (Print)9783319416359
DOIs
Publication statusPublished - 2017
EventInternational Conference on Cross Cultural Decision Making, CCDM 2016 - Walt Disney World, United States
Duration: Jul 27 2016Jul 31 2016

Publication series

NameAdvances in Intelligent Systems and Computing
Volume480
ISSN (Print)21945357

Other

OtherInternational Conference on Cross Cultural Decision Making, CCDM 2016
CountryUnited States
CityWalt Disney World
Period7/27/167/31/16

Keywords

  • Cognitive bias
  • Decision making
  • Irrational behavior
  • Price of zero

ASJC Scopus subject areas

  • Control and Systems Engineering
  • Computer Science(all)

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  • Cite this

    Murata, A., Matsushita, Y., & Moriwaka, M. (2017). Effects of price of zero on decision making: An attempt to generalize human’s irrational behavior to price of zero. In Advances in Cross-Cultural Decision Making - Proceedings of the AHFE International Conference on Cross-Cultural Decision Making, CCDM 2016 (Vol. 480, pp. 109-116). (Advances in Intelligent Systems and Computing; Vol. 480). Springer Verlag. https://doi.org/10.1007/978-3-319-41636-6_9