Warm Fuzzy Feelings Fuel Higher Prices

The prices people set on items they plan to sell, say on eBay, could depend on how warm and fuzzy they're feeling.

People place greater economic value on items they're emotionally attached to, and they might also assign higher value to objects when they're in a friendlier mindset, a new study suggests. The finding has implications for online marketplaces, where sellers might charge more for something if they are setting the price while at home or otherwise in the presence of loved ones, the researchers conclude.

The study, reported in the December issue of the Journal of Consumer Research,  looked at how emotion influences commercial behavior. Researchers divided subjects into three groups: The first read a story about friendship, the second a story about business and the third, a control group, wasn't given a story.

Researchers then gave subjects a plain white mug and asked them to assign it a sale value. The group that had been primed with the story about camaraderie charged $5.32 on average, while the group exposed to the business story set the price at $3.60. People given neither story charged $3.42. 

The researchers suggest the price difference is due to a heightened sense of loss sellers experience if they are asked to part with something when they are feeling more amicable.

"If I'm with my kid, there's a warm, fuzzy feeling and I place more value on things, whereas at the office, it's more of a rational business decision," said Pankaj Aggarwal, assistant professor of marketing at the University of Toronto.

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