Jj. Halpern, THE TRANSACTION INDEX - A METHOD FOR STANDARDIZING COMPARISONS OF TRANSACTION CHARACTERISTICS ACROSS DIFFERENT CONTEXTS, Group decision and negotiation, 6(6), 1997, pp. 557-572
This article develops a transaction index (TI), a new method that faci
litates comparisons of pricing behavior between reference and target g
roups of transactors across different types of transactions. The TI co
mpares the target price, derived from the target group, to a transacti
on zone, which is a range of plausible prices in a negotiation establi
shed by the reference groups. These two groups should be conceptually
related, for example, through a social association. Statistically, the
index can bring transactions at widely differing price levels to a co
mmon level and standardize price volatility to facilitate comparisons
across transactions. Conceptually, it incorporates a comparison of two
groups into a single measure so that their relationship can be analyz
ed in terms of other variables. An application of a TI to friends' and
strangers' pricing decisions reveals richer associations than those o
bserved through more traditional analytic approaches.