Study Proposal #8: Affective Psychology of Value (Hsee & Rottenstreich) (C) | 06NOV13
Concavity in value interpretation is not only influenced by the rate of satiation but also on how affect is used to identify value. When feeling is used to determine value, value increases with higher concavity than when calculation is used. The examples in this paper refer only to material items that are for entertainment purposes or that are causes abstract to the participant. I want to generalize this relationship between feelings and calculations to valuation decisions that involve decisions with longer term personal impacts. I claim that this affective approach to value has a large effect on purchasing in the rental housing market. The type of housing one lives in is a prototypical long term lifestyle decision and will be useful for this inquiry.
The experiment will follow the same structure as study #3 in the Hsee & Rottenstreich Paper. A 2(scope) x 2 (presentation) design on a random population sample at a university will be sufficient. Participants will be assigned to one of four conditions as presented in the table below.
The difference in the experiment is that instead of using Pandas, the questions will be about evaluating a bachelor apartment for university living arrangements. One apartment will be 200 sq ft, and one will be listed as 400 sq ft. There will be two conditions, one affect poor and one affect rich. The affect poor condition will present the apartments as simply empty floor plans with indications of scale and dimensions. The affect rich condition will show an interior photo of the furnished apartments and the photos will give a sense of differences in size. The participants will then be asked to put a rental price on the condition presented. Prices will be listed in the order of $400 – $800 in order to make relationship of 100 sq ft merits $200 salient.
|Experiment structure / predictions||200 Sq Ft||400 sq ft|
|Affect poor||a) Pay least||b)More than a)|
|Affect rich||c) Pay most||d) Slightly less than c)|
If value is a step function when feeling is used and is linear when calculation is used then the same results will hold when study #3 is generalized to a valuation of purchasing decisions that have long term habitual and lifestyle implications for the valuer.
These results would suggest that the results of the Hsee & Rottenstreich paper can be generalized to valuation decisions that are not just a one off spending decision on behalf of the valuer. This would have implications for how real estate agents go about marketing and sales to potential clients. It would also be important for developers in deciding what type of housing to build in certain markets based on a comparison of what is available.