Marketing researchers frequently split (dichotomize) continuous predictor variables into two groups, such as with a median split, before performing data analysis. The practice is prevalent but its effects are not well understood. In this paper, we present historic results on the effects of...

The authors review research on judgments of random and nonrandom sequences involving binary events with a focus on studies documenting gambler's fallacy and hot hand beliefs. The domains of judgment include random devices, births, lotteries, sports performances, stock prices, and others. After...

Laboratory experiments have provided useful information about how people behave in risky siluations. In particular, such experiments have allowed for the observation of many deviations from the predictions of expected utility theory. There is some dispute, however, over the effect ofthe use of...

This paper reports on three laboratory experiments designed to investigate the roles of decision costs and rewards on the accuracy of economic decisions. The experimental vehicle is a purchase decision employing the Becker-DeGroot-Marshak (BDM) mechanism. The first experiment verifies the...

This research documents the long term impacts of delayed cleanup on property values in communities neighboring prominent Superfund sites. The research examines the sale prices of nearly 34,000 homes near sites in three metropolitan areas for up to a 30-year period. To our knowledge, no other...

Can hypothetical questions reveal true values? An examination of thelaboratory experimental literature examining contingent valuation (CV)lends some support for using open-ended hypothetical willingness to payquestions. However, experimental studies examining dichotomous choicehave found that...