Anuj Shah

Eldar Shafir

Sendhil MullainathanSJDM2012

The Stable Frame of Scarcity

Behavioral magic

Hall(2008)

Having more means…

Having less means…

Scarcity and context

Abundance: Scarcity:

Predictions

Scarcity creates a stable frame for value

This is true for various forms of scarcity

Thaler (1985)

N = 148

Study 1: WTP

Low Income High Income0

1

2

3

4

5

6

7Resort

Grocery

WTP (

$)

Study 2: Valuing money

Slovic et al.(2002)

Study 2: Attractiveness

Low Income High Income0

2

4

6

8

10

12

14No Loss

Loss

Att

ract

iveness

N = 100

Study 3: The broader context

Study 3: Using the ticket

Price Paid Market Price1

2

3

4

5

Low Income

High Income

N = 98

Study 4: Fixed resources

“that’s expensive!” “that’s not so bad.”

Morewedge et al. (2007)

Study 4: Expensiveness

Low Income High Income123456789

1011

Small

Large

Expensi

veness

N = 123

Study 5: Caloric scarcity

Study 5: Fattiness

Dieter Non-dieter1

2

3

4

5

6

7

8

9

10

11Small

Large

Fatt

enin

g

N = 85

Study 6: The feud

Study 6: Expensiveness

Poor Rich123456789

1011

Small

Large

Expensi

veness

N = 73

What we’ve seen

Scarcity leads to more stable valuation

And somewhat less flexible accounting

Perhaps because scarcity creates a salient, stable context

Thanks

Experiment 7

Epley et al. (2006)

Experiment 7

N = 141

Low Income High Income0

10

20

30

40

50

60

70

80

90

100rebate

bonus

% S

ave