From Hypothetical to Real: Analyzing WTA Bias in Pawn Shop Deals

Abstract

Understanding the divergence between hypothetical and actual willingness-to-accept (WTA) valuations is important for both economic theory and real-world applications. This study analyzes this divergence using a unique dataset from the reality television series Pawn Stars, which captures authentic bargaining interactions. We examine how item characteristics - such as type, origin, price range - and negotiation factors - like buyer experience and expert appraisal - influence hypothetical bias and negotiation outcomes. Our empirical findings reveal a persistent positive hypothetical bias, mainly driven by higher price ranges and specific item categories. Items acquired through purchase or discovery exhibit less bias than personal possessions, and high-value goods display smaller disparities between hypothetical and actual WTA valuations. These results enhance our understanding of real-world bargaining dynamics and provide valuable insights into mitigating hypothetical biases in economic assessments.