The Law of Demand and the Loss of Confidence Effect: An
Experimental Study

J 2019

The Law of Demand and the Loss of Confidence Effect: An Experimental Study

MAZUREK, Jiří, Cristina PEREZ RICO and Carlos FERNANDEZ GARCIA

Basic information

Original name

The Law of Demand and the Loss of Confidence Effect: An Experimental Study

Authors

MAZUREK, Jiří (203 Czech Republic, guarantor, belonging to the institution), Cristina PEREZ RICO (724 Spain) and Carlos FERNANDEZ GARCIA (724 Spain)

Edition

Heliyon, 2019, 2405-8440

Other information

Language

English

Type of outcome

Článek v odborném periodiku

Field of Study

50201 Economic Theory

Country of publisher

Netherlands

Confidentiality degree

není předmětem státního či obchodního tajemství

References:

URL

RIV identification code

RIV/47813059:19520/19:A0000057

Organization unit

School of Business Administration in Karvina

DOI

http://dx.doi.org/10.1016/j.heliyon.2019.e02685

Keywords in English

demand function; price elasticity of demand; irrationality; loss of confidence and experimental study

Změněno: 21/4/2020 11:21, Ing. Petra Skoumalová

Abstract

V originále

The aim of this article is to examine the possibility that a market demand function (curve) might not be monotonically decreasing in its entire domain according to the consumer theory neoclassical as assumed by the law of demand (for normal goods). This may happen due to limited rationality of (some) consumers and the anchor price effect. When a price of a good decreases to some point, the amount demanded might stops increasing due to the loss of confidence effect: consumers’ unwillingness to buy a too cheap product. The existence of this effect was examined via questionnaire on a sample of 377 undergraduate university students from the Czech Republic, Ecuador and Spain. The main result of this experimental study is that the loss of confidence effect appeared at all three locations, which indicates that the law of demand may not be valid in its entire domain. Furthermore, the results of this study imply that a significant percentage of people make decisions of limited rationality even when facing a very simple task. In addition, statistically significant difference in rational behavior with respect to gender was found.

Citovat

MAZUREK, Jiří, Cristina PEREZ RICO and Carlos FERNANDEZ GARCIA. The Law of Demand and the Loss of Confidence Effect: An Experimental Study. Heliyon. 2019, vol. 5, No 11, p. 1-6. ISSN 2405-8440. Available from: https://dx.doi.org/10.1016/j.heliyon.2019.e02685.

@article{33789,
   author = {Mazurek, Jiří and Perez Rico, Cristina and Fernandez Garcia, Carlos},
   article_number = {11},
   doi = {http://dx.doi.org/10.1016/j.heliyon.2019.e02685},
   keywords = {demand function; price elasticity of demand; irrationality; loss of confidence and experimental study},
   language = {eng},
   issn = {2405-8440},
   journal = {Heliyon},
   title = {The Law of Demand and the Loss of Confidence Effect: An Experimental Study},
   url = {https://www.sciencedirect.com/science/article/pii/S2405844019363455},
   volume = {5},
   year = {2019}
}

TY  - JOUR
ID  - 33789
AU  - Mazurek, Jiří - Perez Rico, Cristina - Fernandez Garcia, Carlos
PY  - 2019
TI  - The Law of Demand and the Loss of Confidence Effect: An Experimental Study
JF  - Heliyon
VL  - 5
IS  - 11
SP  - 1-6
EP  - 1-6
SN  - 24058440
KW  - demand function
KW  - price elasticity of demand
KW  - irrationality
KW  - loss of confidence and experimental study
UR  - https://www.sciencedirect.com/science/article/pii/S2405844019363455
L2  - https://www.sciencedirect.com/science/article/pii/S2405844019363455
N2  - The aim of this article is to examine the possibility that a market demand function (curve) might not be monotonically decreasing in its entire domain according to the consumer theory neoclassical as assumed by the law of demand (for normal goods). This may happen due to limited rationality of (some) consumers and the anchor price effect. When a price of a good decreases to some point, the amount demanded might stops increasing due to the loss of confidence effect: consumers’ unwillingness to buy a too cheap product. The existence of this effect was examined via questionnaire on a sample of 377 undergraduate university students from the Czech Republic, Ecuador and Spain. The main result of this experimental study is that the loss of confidence effect appeared at all three locations, which indicates that the law of demand may not be valid in its entire domain. Furthermore, the results of this study imply that a significant percentage of people make decisions of limited rationality even when facing a very simple task. In addition, statistically significant difference in rational behavior with respect to gender was found.
ER  -

MAZUREK, Jiří, Cristina PEREZ RICO and Carlos FERNANDEZ GARCIA. The Law of Demand and the Loss of Confidence Effect: An Experimental Study. \textit{Heliyon}. 2019, vol.~5, No~11, p.~1-6. ISSN~2405-8440. Available from: https://dx.doi.org/10.1016/j.heliyon.2019.e02685.

Detailed Information on Publication Record