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Illusory Price Increases after the Euro Changeover in Germany: An Expectancy-Consistent Bias

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Abstract

The aim of the present report is to review research demonstrating the role played by expectations for observed illusory price increases after the euro introduction in Germany. In laboratory experiments when participants are asked to estimate price changes in a restaurant following the euro introduction, the price estimates are found to be biased in the direction of the expectation of rising prices. The research also examines the extent to which a similar judgment bias is evident in other areas and how interventions counteract the bias. A further focus of the research is on the underlying process. In this respect the results show that the bias is based on a selective outcome correction process not previously described. Theoretical implications and practical implications for consumer policy issues are highlighted.

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Notes

  1. In addition, we created a second, parallel version where the same dishes that had become more expensive in the first version now became cheaper and vice versa. We did this in order to test whether the position of the dish on the menu had an influence on the price trend estimations. The result showed no significant differences between the two parallel versions of the menu.

  2. At the beginning of each session we told the participants (students) in the control group that everyone who participated in the survey would take part in a lottery with two cinema tokens as a prize, whereas the participants in the experimental group were told that the person with the most accurate estimates would receive two cinema tokens.

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Authors and Affiliations

  1. Social Psychology, Department of Psychology, Ludwig-Maximilians-University Munich, Leopoldstr. 13, 80802, Munich, Germany

    Eva Traut-Mattausch, Tobias Greitemeyer & Dieter Frey

  2. Economic and Social Psychology Unit, Institute of Psychology, Georg-August-University Goettingen, Gosslerstr. 14, Goettingen, Germany

    Stefan Schulz-Hardt

Authors
  1. Eva Traut-Mattausch
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  2. Tobias Greitemeyer
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  3. Dieter Frey
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  4. Stefan Schulz-Hardt
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Corresponding author

Correspondence to Eva Traut-Mattausch.

Additional information

The present research was supported by a grant from the Deutsche Forschungsgemeinschaft (DFG), project no. GR 1882/4-1.

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Traut-Mattausch, E., Greitemeyer, T., Frey, D. et al. Illusory Price Increases after the Euro Changeover in Germany: An Expectancy-Consistent Bias. J Consum Policy 30, 421–434 (2007). https://doi.org/10.1007/s10603-007-9049-y

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  • DOI: https://doi.org/10.1007/s10603-007-9049-y

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