How changes in price and salary affect economic satisfaction: Information integration models and inference processes

Abstract

Preliminary studies demonstrated the interactive effects of changes in salary and inflation rate on feelings of personal satisfaction, and showed that the effects of price increases in different cost categories could he described by a weighted average model. Participants in the main study were presented with varying hypothetical economic situations which included salary changes (raises) as well as specific price changes. A ratio model was found to describe how raise levels and price increases were combined. The rationality of this model was discussed in terms of how variations in price and income would affect the amount of a given commodity that could he purchased. On some trials only partial information was presented. Low ratings of personal satisfaction were produced when information about raises was missing, and high ratings were produced when information about price increases was missing. These results were discussed in terms of inferences people make when a key source of information is missing.