January 2025
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2 Reads
SSRN Electronic Journal
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January 2025
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2 Reads
SSRN Electronic Journal
January 2024
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6 Reads
March 2023
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7 Reads
European Journal of Political Economy
We conducted two fundraising experiments to study the effects (1) of compassion towards the beneficiary, and (2) of giving participants an opportunity to attribute small donations to luck. We find that exposing the participants to a plea to help the beneficiary increases the average donation. Giving participants an opportunity to attribute small donations to luck decreases the average donation. We find that in our setting, the latter effect dominates.
August 2022
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3 Reads
Recent studies in psychology and neuroscience offer systematic evidence that fictional works exert a surprisingly strong influence on readers and have the power to shape their opinions and worldviews. Building on these findings, we study what we term Potterian economics, the economic ideas, insights, and structure, found in Harry Potter books, to assess how the books might affect economic literacy. A conservative estimate suggests that more than 7.3 percent of the world population has read the Harry Potter books, and millions more have seen their movie adaptations. These extraordinary figures underscore the importance of the messages the books convey. We explore the Potterian economic model and compare it to professional economic models to assess the consistency of the Potterian economic principles with the existing economic models. We find that some of the principles of Potterian economics are consistent with economists models. Many other principles, however, are distorted and contain numerous inaccuracies, contradicting professional economists views and insights. We conclude that Potterian economics can teach us about the formation and dissemination of folk economics, the intuitive notions of naive individuals who see market transactions as a zero-sum game, who care about distribution but fail to understand incentives and efficiency, and who think of prices as allocating wealth but not resources or their efficient use.
January 2022
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69 Reads
SSRN Electronic Journal
We conducted two fundraising experiments to study the effects (1) of compassion towards the beneficiary, and (2) of giving participants an opportunity to attribute small donations to luck. We find that exposing the participants to a plea to help the beneficiary increases the average donation. Giving participants an opportunity to attribute small donations to luck decreases the average donation. We find that in our setting, the latter effect dominates.
January 2021
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62 Reads
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4 Citations
SSRN Electronic Journal
We study different notions of sale and regular prices, and their variability with store pricing-formats. We use data from three large stores with different pricing-formats (EDLP/Hi-Lo/Hybrid) that are located within 1-km radius. Importantly, the data contain both the actual transaction prices and the actual regular prices as displayed on the store shelves. We combine these data with two “generated” regular price series and study their rigidity. Regular-price rigidity varies with store-formats because different format stores define regular-prices differently. Correspondingly, the meaning of price-cuts varies across store-formats. To interpret the findings, we consider the store pricing format distribution across the US.
January 2019
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195 Reads
SSRN Electronic Journal
9-ending prices are a dominant feature of many retail settings, which according to the existing literature, is because consumers perceive them as being relatively low. Are 9-ending prices really lower than comparable non 9-ending prices? Surprisingly, the empirical evidence on this question is scarce. We use 8 years of weekly scanner price data with over 98 million price observations to document four findings. First, at the category level, 9-ending prices are usually higher, on average, than non 9-ending prices. Second, at the product level, in most cases, 9-ending prices are, on average, higher than prices with other endings. Third, sale prices are more likely to be non-9 ending than the corresponding regular prices. Fourth, among sale prices, 9-ending prices are often lower, on average, than comparable non 9-ending prices. The first three findings imply that although consumers may associate 9-ending prices with low prices, the data indicates otherwise. The fourth finding offers a possible explanation for this misperception. Retailers may be using 9-ending prices to draw consumers’ attention to particularly large price cuts during sales, which perhaps conditions the shoppers to associate 9-ending prices with low prices.
January 2019
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3 Reads
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4 Citations
SSRN Electronic Journal
January 2018
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1,393 Reads
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2 Citations
SSRN Electronic Journal
We use novel and unique data to study the effect of price changes in the market for luxury and middle class homes. We find that luxury home sales respond less to price changes than the middle-class home sales; in the market for luxury homes, past prices affect current prices; luxury home prices persist; and prices of luxury homes are stickier than prices of middle-class homes. Recent macroeconomic models predict that housing markets can have counter-cyclical effect, if home prices are flexible. Our findings imply that home prices, especially luxury home prices, may not be flexible enough to generate such effect.
... where ̅ , is the average frequency of price changes of product in store (Nakamura and Steinsson, 2008). Table 1 reports the averages over all products (Ray et al., 2023). ...
January 2021
SSRN Electronic Journal
... The effect of 9-ending prices on shoppers' behavior is not limited to the US. Ater and Gerlitz (2017), Snir et al. (2017), Levy et al. (2020), and Knotek et al. (2023) show that 9-ending prices were common in Israel before 2014, and offer evidence consistent with 9ending prices having a positive effect on demand. Hoffmann and Kim-Kurz (2006) show that 9-ending prices are common and rigid in Germany. ...
January 2019
SSRN Electronic Journal
... Lee and Mori (2016) also proposed that certain types of housing gain visibility in terms of size, luxurious design, and high-quality locations with excellent neighborhood amenities. Additionally, by using the sampled data from the housing market in Israel, Levy and Snir (2018) found that, luxury housing prices are stickier and less flexible than the middle-class housing prices as the homebuyers in search of luxury will lead to price rigidities in some market segments and may affect the propagation of economic cycles. ...
January 2018
SSRN Electronic Journal