Psychologist logo
Woman using mobile phone to pay in coffee shop
Cognition and perception, Social and behavioural

We consistently overestimate how much other people will enjoy or pay for stuff

A new study has examined a phenomenon called the overestimation bias.

14 January 2020

By Emma Young

Imagine taking a two-week holiday to the Bahamas. Sand, sea, and reef — who wouldn’t love it? I mean, personally, though I would love aspects of it, I’m quickly bored on a beach, I’m too nervous of deep water to dive and excessive sun brings me out in a rash. But that’s just me. Anyone else would just adore it….right?

This, it turns out, is a classic example of a bias, dubbed the overestimation bias, revealed in a new paper, published in the Journal of Experimental Psychology. In a series of studies involving thousands of participants, Minah Jung at New York University and colleagues found that we over-estimate how much other people will enjoy, pay for or wait for a desirable experience or object. The team thinks this is because while we can appreciate that a predominantly positive experience may have some downsides for us personally, we tend to assume that for somebody else, it will be more purely perfect.

In the first set of studies, the team explored how much participants were willing to pay for a movie ticket vs how much they thought someone else would pay for the same ticket; how much they — or how much they thought other people — would enjoy various products (including a return flight to Paris, a treadmill or a personal driver plus limousine for a month); and how long they or others would be willing to wait for a new product or experience, such as seeing the latest Star Wars movie. In each of these studies, the overestimation bias was clearly evident.

A further study showed that this bias extends to unappealing things, too. The participants in this group reported that other people would pay more than they would to avoid a range of negative scenarios, including going without sleep that night and eating three large jalapeno peppers with nothing to drink. They also reported that others would find those experiences worse than they would themselves.

This team suspects, therefore, that the overestimation bias happens because we believe that other people have less nuanced experiences — so more fully positive reactions to “good” things and more purely negative reactions to “bad” things — than we do ourselves.

This idea was further supported by a study finding that when an event could only be seen as good, with no possible downsides — winning $500 — the overestimation bias vanished. Also, when a separate group of participants were prompted to appreciate that people do in fact have diverse preferences and valuations, the bias was significantly reduced.

“People are capable of understanding others’ preferences, but they do not spontaneously consider and integrate the entire distribution of possible preferences unless they are explicitly compelled to do so,” the researchers write.

The work has all kinds of implications. When buying gifts for others, for example, it would be sensible to bear in mind that if you think there could be downsides to receiving a particular “amazing” object (like an electronic massager, say), the intended recipient could well be less than 100 % enthusiastic about it, too. Also, if you do receive such an object and immediately go to sell it, the price you think someone else will be willing to pay for it could well be less than you hope.

As the team writes: “In social judgements we are frequently called upon to make predictions about the evaluations of others, such as how much a friend will enjoy a recommended novel, how long a coworker will be willing to wait for useful feedback, or how much a potential buyer will be willing to offer for a used set of golf clubs. The overestimation bias has important implications [for] real world economic and social decisions.”

Further reading

– Overestimating the valuations and preferences of others

About the author

Emma Young (@EmmaELYoung) is a staff writer at BPS Research Digest