The Rational Man

Is anyone else sick of the generic behavioral economics journal article providing an experiment showing that humans are not perfectly rational in the specific context of the experiment?

Finally, some researchers are illustrating human's ability to reason.

Reason-Based Judgments: Using Reasons to Decouple Perceived Price-Quality Correlation

Ivo Vlaev^{a, ,} , Nick Chater^a, Rich Lewis^b and Greg Davies^a

^aDepartment of Psychology, University College London, London, WC1H 0AP, UK

^bDepartment of Psychology, University of Warwick, Coventry, CV4 7AL, UK

Received 23 October 2007;

revised 18 May 2009;

accepted 10 June 2009.

Available online 13 June 2009.

Abstract

Many models of consumer behaviour assume that people evaluate price and quality independently. However, evidence shows that consumers perceive price and quality as positively related even when they are weakly correlated in the real markets. This paper explores whether this perceived relationship can be cognitively de-coupled by providing explicit reasons why low price and high quality may be compatible. The participants were asked to rate existing stores and fictitious stores in a two-dimensional price-quality space. When the participants were given plausible reasons why the seemingly high quality fictitious stores could have lower than average prices, their judgement of the price-quality relationship was significantly less correlated than when these stores were judged without such reasons. Therefore, the demonstrated phenomenon of reason-based judgments can be used to attenuate the typical price-quality overestimation, or heuristic, which has important implications for decision making research and marketing practice.

Keywords: judgment; reasons; price-quality correlation; consumer behaviour; decision making

Journal of Economic Psychology