Video Player

How Much Do We Differ From Others and When Do We Know it?

Shane Frederick: June 4, 2005; Running Time: 55:59

About the Lecture

About the Lecture

Envy Shane Frederick’s Consumer Behavior students. They get to assign prices to such real but quirky products as jalapeno- and popcorn-flavored jelly beans, as well as to hypothetical products, like a pill that enables one to speak French instantly. More to the point, Frederick asks his student-confederates whether they would pay more or less than others for these goods. From classroom experiments and his own research in cognitive and social psychology and decision theory, Frederick has discovered a “false consensus” around our “willingness to pay for goods” (WPG). Individuals assume that whatever they would be willing to pay for an item, others would pay more. This applies to imaginary and actual products, as well as to such experiences as “spending time in a discomfort room.” And while Frederick’s research shows how firmly individuals differentiate themselves from others, at least around “WPG,” he remarks on an apparent paradox: people find common preferences when confronted with stimuli as disparate as Chinese ideograms, sachets, and even lines arrayed on a page. Frederick concludes that “a shared evolutionary and cultural history induces some degree of agreement about nearly everything,” so that our own beliefs are often “the best signal (we) have about others’ preferences.” Yet, don’t assume too much, because “humans have a widespread, mistaken belief that they value things less than others.” Frederick sees some relevance in these findings for marketing strategy as well as business practices.

Lecture Details

Location: Wong Auditorium

About the Speaker

Shane Frederick

Sarofim Family Career Development Professor, and Associate Professor of Management Science, MIT Sloan School of Management

Shane Frederick's primary research interests are judgment and choice heuristics, intertemporal choice, preference elicitation procedures, the relation between IQ and decision making strategies, consumer regret, and biases in predicting the preferences of others. He has been at Sloan since 2001. Prior to that, he was a research associate and lecturer at the Woodrow Wilson School of Public & International Affairs at Princeton University. He received a Ph.D. in Decision Sciences from Carnegie Mellon University in 1999, an M.S. in Resource Management from Simon Fraser University in 1993 and a B.S. in Zoology from the University of Wisconsin in 1990.

Shane Frederick

Frederick's MIT website

About the Host

About the Host

MIT Sloan School of Management

The MIT Sloan School of Management, based in Cambridge, Massachusetts, is one of the world’s leading business schools — conducting cutting-edge research and providing management education to top students from more than 60 countries. The School is part of MIT’s rich intellectual tradition of education and research.

MIT Sloan began in 1914 as engineering administration curriculum in the MIT Department of Economics and Statistics. The scope and depth of this educational focus have grown steadily in response to advances in the theory and practice of management to today’s broad-based management school.

A program offering a master’s degree in management was established in 1925. The world’s first university-based executive education program — the MIT Sloan Fellows — was created in 1931 under the sponsorship of Alfred P. Sloan, Jr., an 1895 MIT graduate who was then chairman of General Motors. A MIT Sloan Foundation grant established the MIT School of Industrial Management in 1952 with a charge of educating the “ideal manager.”