Scarcity Frames Value

Anuj K. Shah, Eldar Shafir, Sendhil Mullainathan

Research output: Contribution to journalArticle

79 Scopus citations

Abstract

Economic models of decision making assume that people have a stable way of thinking about value. In contrast, psychology has shown that people’s preferences are often malleable and influenced by normatively irrelevant contextual features. Whereas economics derives its predictions from the assumption that people navigate a world of scarce resources, recent psychological work has shown that people often do not attend to scarcity. In this article, we show that when scarcity does influence cognition, it renders people less susceptible to classic context effects. Under conditions of scarcity, people focus on pressing needs and recognize the trade-offs that must be made against those needs. Those trade-offs frame perception more consistently than irrelevant contextual cues, which exert less influence. The results suggest that scarcity can align certain behaviors more closely with traditional economic predictions.

Original languageEnglish (US)
Pages (from-to)402-412
Number of pages11
JournalPsychological Science
Volume26
Issue number4
DOIs
StatePublished - Apr 18 2015

All Science Journal Classification (ASJC) codes

  • Psychology(all)

Keywords

  • context effects
  • judgment and decision making
  • open data
  • open materials
  • scarcity

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