title: Scarcity frames value.
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.
authors: Booth School of Business, University of Chicago anuj.shah@chicagobooth.edu.
authors: Anuj K
authors: AK
authors: Shah
authors: Department of Psychology, Princeton University Woodrow Wilson School of Public and International Affairs, Princeton University.
authors: Eldar
authors: E
authors: Shafir
authors: Department of Economics, Harvard University.
authors: Sendhil
authors: S
authors: Mullainathan
mesh_terms: D000328:Adult; D003071:Cognition; D003657:Decision Making; D005260:Female; D006801:Humans; D008297:Male; D018803:Models, Economic
keywords: context effects; judgment and decision making; open data; open materials; scarcity