Price Judgments Research Articles

The cure effect: Individuals demand universal access for health treatments that claim to eliminate disease symptoms.

The present research documents a cure effect, whereby individuals are more likely to demand affordable prices when health treatments (e.g., drugs, medications, therapies) claim to eliminate (vs. reduce) disease symptoms. This preference for low-priced "cures" contradicts the fundamental premise of value-based pricing, which would expect individuals to tolerate higher prices for cures because they are putatively more effective and therefore more valuable. Five studies with over 2,500 participants provide robust evidence for the cure effect and show that it occurs because individuals judge a health treatment's acceptable price by focusing predominantly on its communal value rather than its market value. Given that cures are associated with maximal effectiveness, they are disproportionately endowed with communal value and more likely to yield price judgments that reflect concerns about universal access. (PsycInfo Database Record (c) 2023 APA, all rights reserved).

How Do We Perceive Prices? A Three-category Taxonomy of Reference Price Effect on Consumers’ Price Judgments

Aims: Price is one of the pivotal determinants when consumers make purchasing decisions. An unresolved issue in extant literature regarding factors that affect price referencing remains. The difficulty is in identifying types of price references that consumers will use in any given purchasing situation. This study hence proposed a new scheme of three-category taxonomy of reference price model and can be used as a conceptual framework for examining the effects of various reference prices on consumers’ price judgments.
 Methodology: A literature review and theoretical background lead to propositions.
 Conclusion: This research not only fills the literature gaps of referencing prices on consumer price judgments but also a three-category reference price model is developed. The present study goes beyond previous work in this field and a comprehensive set of reference price cues that influence consumers’ final reference price formation. This new model gives future research a direction to test and refine relationships proposed in the present study.

Price Judgment of Goods

Price Judgment of Goods

Location, location, location: When and how low price locations improve consumer price perceptions

AbstractDoes seeing a price in a physically low (vs. high) location prompt consumers to believe that the featured product is less costly? Recent research supports this possibility by showing that low price locations trigger “down=less” metaphors which prompt price perceptions that are monetarily “low” in magnitude. Extending such work, we offer a two‐stage model to account for price location effects and examine theoretically‐relevant moderators that influence the likelihood of “down=less” metaphors being activated (Stage 1) and being mapped onto a price magnitude judgment (Stage 2). Results demonstrate that price location effects will emerge under conditions where consumers (a) experience feelings of high (vs. low) power that encourage metaphor activation and (b) possess a high (vs. low) need for structure that encourages the mapping, or transfer, of these metaphors onto a price judgment mapping. A final study shows that “down=less” metaphorical influences do not affect price magnitude judgments in the presence of factors that inhibit either metaphor activation (i.e., feelings of low power) or mapping (i.e., a low need for structure). By identifying these contingencies, this research further specifies when price location effects are likely to arise, increasing our understanding of pricing in general and this locational phenomenon in particular.

An Experimental Study on Anchoring Effect of Consumers' Price Judgment Based on Consumers' Experiencing Scenes.

Consumers are prone to cognitive biases in decision-making due to the impact of time restrictions, specific environment, and project inducements in the process of experience. Compared with traditional marketing scenarios, it is easy to bias decision makers due to the existence of anchor information. Research on anchoring effect focuses on psychology, economics, law, and medicine instead of the price judgment of consumers. This article uses experimental research to explore the existence and influencing factors of anchoring effect when consumers judge and estimate the price of a product in experiencing scenes. In this article, the hypothesis is that anchoring effect exists and is influenced by factors including anchor value, gender, emotion, personality, knowledge and skill, time pressure, early warning indication, cognitive need, and self-confidence level under external and internal anchor conditions. Subjects judged and estimated different prices after product experience through the design of different decision-making scenarios of external (high anchors and low anchors) and internal anchors, and finally, the anchoring index (AI) and the mean skew index were used to calculate the anchoring effect. The experimental results showed that consumers were affected by anchoring effect when making price judgment in experiencing scenes. In addition to the factors of time pressure and self-confidence level, gender, personality, knowledge, and skill all had a significant influence on anchoring effect under external anchor conditions. Finally, this article provides advice for enterprise marketing planners including setting reasonable anchor values, highlighting the design of experiencing scenes, and developing differentiation strategies.

How Regulatory Focus Affects Perceptions of Online Limited-Time Promotions

Prior research on online limited-time promotions has not yet examined the role of regulatory focus and culture. As e-tailers expand across the globe, they need to understand how customers with a different regulatory focus across cultures react to online limited-time promotions. This study, using the lens of regulatory focus, examines the impact of time constraints and framing of online limited-time promotions on different culture customers’ price and product judgments. Through analyzing previous literature and identifying relevant insights from that work, we found that different combinations of time constraints and message framing should be used for customers who are prevention- (e.g., East Asian) versus promotion- (e.g., Caucasian) focused. Theoretical and practical implications are also discussed.

Meaningless Descriptors Increase Price Judgments and Decrease Quality Judgments

Consumers commonly encounter products with descriptors. Descriptors with meanings understood by consumers clearly affect judgments of the described products. However, can descriptors for which consumers do not know the word’s semantic meaning (as is increasingly common in a globalized world) still affect judgments in systematic ways, via altering the product’s perceived prototypicality? We examine two kinds of judgments that typically move in the same direction, but which we propose are affected by prototypicality in opposite directions: (a) judgments of how expensive the product is and (b) expectations of the subjective quality of the product. Four experiments show that meaningless descriptors lead consumers to assume that a product is a less prototypical version in its category, increasing price judgments but decreasing quality expectations. Altogether, meaningless descriptors lead to more negative attitudes toward products. This research thus sheds light on the impact of encountering descriptor words with unknown meaning, showing that encountering such words does not lead to the typical effects wherein factors that lift price judgments also lift quality expectations.

Anchoring effect in judgments of objective fact and subjective preference

The way by which various sources of external information interact in their effects on judgment is rarely investigated. Here, we report two experiments that examine how two sources of external information—an anchor (a reference price) and an eco-label—influence judgments of an objective fact (product price) and a subjective preference (willingness-to-pay for the product). Participants’ price judgments were drawn in the direction of the anchor point, whereas the eco-label resulted in higher judgments of objective fact (Experiment 1) but did not influence subjective preference (Experiment 2). Interestingly, the eco-label seemed to strengthen the effect of the high anchor in judgments of objective fact. Further, participants with higher environmental concern answered a higher price on the subjective preference questions when they received a high anchor, as well as a lower price when they received a low anchor in comparison to the low environmental concern group. This study demonstrates that various external information sources can strengthen each other’s effects on consumer belief about products, while the effects are weaker for consumers’ preferences. The implications of the results for decision making are discussed.

Is it Expensive? The Dual Effect of Construal Level on Price Judgments

When judging the expensiveness of a product or service, consumers often make comparisons to similar offerings that serve as reference points. Extant pricing literature shows that reference items in the consideration set may trigger a “contrast effect,” where higher-priced items make the target item seem less expensive. Two studies show that the effect of reference price depends on the consumer’s level of abstract thinking—or “construal level” —at the time of judgment. Concrete construal leads to the standard contrast effect, but abstract construal leads to an assimilation effect, where higher-priced reference items make the target seem more expensive.

The role of reference prices in the lodging industry: the moderating effect of an individual’s psychological state

ABSTRACTThe question of how customers use reference prices is a central issue in the lodging industry. This research examines the effect of one’s psychological state, namely sense of power, on the relative use of two reference prices in price evaluations. The study used 2 (power: high vs. low) × 2 (reference price: internal vs. external) × 2 (reference price level: high vs. low) between-subjects experiment. The results indicate that powerful individuals are more influenced by an internal reference price while their powerless counterparts tend to rely on an external reference price. In addition, price judgment mediates such hypothesized interaction on consumers’ willingness to book.

The Analysis of Pre and Post Negotiation of Framing and Partner’s Objective on Transfer Prices

Transfer price negotiations are important to managers as they influence both their own and other divisional profits. These transfer prices are affected by both economic factors (market prices) and behavioral factors including fairness on judgments about negotiated transfer prices. In the current study, we examine whether the impact of accounting information on managers’ transfer price expectations are affected by the way accounting information is framed (either as potential gains or potential losses) and the managers’ perception of the other negotiation partners’ objective (whether their partner’s objective involves high or lowconcern-for-others). These expectations are important as they directly affect the costs and outcomes of negotiations. A controlled laboratory experiment was conducted to test the proposed hypotheses, using a 2 x 2 x 2 between-subjects design. The participants of an experiment were 216 undergraduate accounting students from Faculty of Economics and Business, Soegijapranata Catholic University, Semarang. The results of this study that compared to the mainframe, a loss frame exacerbates managers’ self-serving bias and increases the transfer price expectation gap between buyers and sellers. Further, we found that the negotiation partner’s objective had a significant impact on sellers’ transfer price judgments. This finding also found that the degree of concern for the other party has a significant impact on the judgment, in particular, the transfer price for the seller division.

THE ANALYSIS OF PRE AND POST NEGOTIATION OF FRAMING AND PARTNER’S OBJECTIVE ON TRANSFER PRICES

Transfer price negotiations are important to managers as they influence both their own and other divisional profits. These transfer prices are affected by both economic factors (market prices) and behavioral factors including fairness on judgments about negotiated transfer prices. In the current study, we examine whether the impact of accounting information on managers’ transfer price expectations are affected by the way accounting information is framed (either as potential gains or potential losses) and the managers’ perception of the other negotiation partners’ objective (whether their partner’s objective involves high or lowconcern-for-others). These expectations are important as they directly affect the costs and outcomes of negotiations. A controlled laboratory experiment was conducted to test the proposed hypotheses, using a 2 x 2 x 2 between-subjects design. The participants of an experiment were 216 undergraduate accounting students from Faculty of Economics and Business, Soegijapranata Catholic University, Semarang. The results of this study that compared to the mainframe, a loss frame exacerbates managers’ self-serving bias and increases the transfer price expectation gap between buyers and sellers. Further, we found that the negotiation partner’s objective had a significant impact on sellers’ transfer price judgments. This finding also found that the degree of concern for the other party has a significant impact on the judgment, in particular, the transfer price for the seller division.

The Effects of Time Pressure on the Belief Revisions of Nonprofessional Investors

This is the first study to experimentally investigate the interactive effects of time pressure and the order of information by integrating a time pressure variable into the predictions of the belief-adjustment (BA) model. Substantial research documents the continuing importance of both order effects and time pressure in a variety of accounting contexts. Prior accounting research (Kahle, Pinsker, & Pennington, 2005; Trotman & Wright, 2000) as well as Hogarth and Einhorn (1992) in their original article on the BA model have called for an investigation of the potential moderating effect of time pressure on order effects; however, no such research exists. We utilize psychology theories of arousal to propose and examine a path model of the effects of time pressure on nonprofessional investors’ belief revisions. Individual investors make a stock price judgment and a short-term investment decision following the receipt of a news announcement that contained mixed (i.e., positive and negative) information about the company’s stock. We manipulated the order in which the information is presented to participants and the time available to make the stock price judgment and investment decision. Our findings support the proposed model. First, investors trying to make a short-term profit under a time limit perceived significant time pressure, even when the time available to make the decision is equal to the time usually required under no time pressure to make such a decision. Second, perceived time pressure had a significant, positive effect on individual investors’ motivation but also on their stress and on perceived task difficulty. Perceived task difficulty had a significant interactive effect with the order of information on individual investors’ investment decisions and there is an optimal level of perceived time pressure and consequent perceived task difficulty at which order effects are eliminated. Third, greater motivation and stress caused increased stock price estimations and greater investments into the stock, which may explain individual investors’ excessive trading observed in prior research. This effect was reversed at very high levels of perceived task difficulty resulting in a disconfirmation bias, presumably to ease cognitive strain and to avoid a loss when the time is too short to make an informed decision.

Evaluation of absolute luxury

Purpose The purpose of this paper is to investigate the effect of product description cues as a way to differentiate luxury products for the absolute luxury consumer and the effect of individual traits such as need for uniqueness, product involvement, and product knowledge on consumers’ perceptions of expected price. Design/methodology/approach An adult sample of 253 female US consumers were recruited for an online survey. Findings Consumers’ need for uniqueness was related to their level of clothing involvement, which in turn was related to clothing knowledge. Fashion clothing involvement was positively related to participants’ product knowledge which in turn positively influenced participants’ perceived change in expected price of products in response to various product descriptors or cues related to absolute luxury products. In addition, younger consumers were found to be more involved in fashion clothing than older consumers. Originality/value This study extends the research into the luxury market and identifies elements of the marketing mix which might be manipulated to better inform potential customers about the luxury product. The study further emphasizes that product descriptors or cues can have an impact on price judgments, especially for highly involved and knowledgeable consumers. This is especially important to academicians as well as marketers since high fashion involved consumers have often been seen as drivers, influential, and legitimists of the fashion adoption process.

The Effects of Service Charges Versus Service-Included Pricing on Deal Perception

Study participants rated menu prices with an automatic percentage service gratuity as better deals than equivalent service-included prices when the service component of price was below the standard 15% tipping rate. However, the reverse was true when the service component of price was above 15%. Furthermore, a move from percentage service gratuity toward dollar service gratuity impeded participants’ menu price judgment. These findings provide some insights regarding which pricing alternative to tipping should be implemented if and when restaurateurs decide to abandon voluntary tipping.

How mobile payment influences the overall store price image

The study here is one of the first to consider how mobile payment and basket price judgments affect shoppers' overall price image of retail stores (OSPI). The OSPI concept reflects customers' beliefs about the overall price level of a store relative to competition. A low OSPI is a strong driver of store loyalty. Three empirical studies building on prospect theory show that positive comparisons of basket prices with mental budgets trigger favorable OSPI judgments. The study also investigates the effects of cash, card, and mobile payments on OSPI formation following Soman's (2003) payment transparency concept. Results show that mobile payment, as an innovative payment option, leads to more positive OSPI judgments. Finally, mobile payment significantly increases customers' willingness to pay when compared to cash payments. In sum, these results have major implications for retailers that want to lower their OSPI in customers' minds.

The interplay of products from the same product line: the role of brand reputation

Purpose– The main aim of this paper is to examine the role of brand reputation on the impact of value product on perceptions of a premium product from the same brand. As a secondary goal, it tests and extends existing findings from judgment tasks to a choice task.Design/methodology/approach– Two online experiments are presented. In Study 1 (1a and 1b), participants provided quality and price judgments to products. Brand reputation was manipulated by comparing common store brands to non-store brands (Study 1a) and to upscale store brands (Study 1b). In Study 2, we examined whether findings indicating a positive effect of a value store brand on a premium store brand extends to a choice context. Participants made choices between a premium store brand and a national brand in the presence of either a value store brand or a value national brand.Findings– It was found that brand reputation plays an important role in the interplay of products in line extensions. While the positive impact of a value brand on a premium brand is at its strongest level for a regular store brand, it still has a moderate size for a non-store brand without a defined reputation, as well as for an upscale store brand. Second, using a choice task, we reject an important rival explanation for the impact of a value store brand on a premium store brand observed in previous research.Research limitations/implications– The authors have focused on consumers’ expectations of products. While research has shown that these expectations play an important role in evaluations, future research may directly examine perceptions after consumption. The findings also offer an opportunity for future research to examine the differences in perceptions between store and non-store brands at different positioning levels, as well as other factors that affect brand reputation.Practical implications– The findings have two practical implications. First, our results indicate that when a manufacturer produces two products in the same category at different levels of quality, there is some benefit in letting consumers know about this relationship. The authors consistently found no negative impact on the brands and often a positive impact on the premium brand. While effects are stronger for common store brands, they are likely to emerge for any type of brand, albeit weaker.Originality/value– This paper contributes to the nascent literature on multi-tier brands and vertical extensions in several ways. First, the role of brand reputation was examined and how it interacts with positioning in line extension context. Second, we show that the effect of a value brand on a premium brand is stronger for store brands, but still existent for non-store brands. These results offer implications for practice and open opportunities for future research on multi-tier store brands.

Futures Trading of Principal Cereal Crops at The Major Commodity Exchanges of India

The present study studies the futures trading of major cereal crops of India. The maximum share of total traded value was of MCX amounting to 88.02 per cent while as that of NCDEX in the trading was 9.16 per cent, ICE was 1.29 per cent, NMCE and ACE was 0.66 per cent each and all other commodity exchanges was only 0.21 per cent. Wheat and rice were banned from futures trading in February 2007 and the ban in case of wheat was lifted in May, 2009 while that of rice is still imposed. It was observed that the claims that futures trading drives up prices and thus inflation is also shooting up to all time high cannot be justified, since the ban on the futures trading was unsuccessful in checking the increasing price of various agricultural commodities. It was observed that futures market encourages competition by attracting traders who hedge their bets and minimize risks on the basis of their own market information and price judgment.

Johnny Appleseed and James M'Gaw's Philip Seymour

With his mush pan on his head, with hand scattering apple seeds upon good earth and other holding Swedenborgian book of prophecy, barefooted strides effortlessly across country doing good to souls and bodies of his fellow humans and to all God's creatures. Harlan Hatcher, Foreword to Appleseed: A Voice in Wilderness most gracious and heart-warming legend to grow up in America, claimed English professor and University of Michigan president Harlan Hatcher in 1945, is that of Appleseed (ix). The cultural exaltation of Appleseed, iconic alter-ego of real-life nurseryman John Chapman, in fact stands as sustained exercise in American hagiography that since nineteenth-century transfigured Chapman man into the St. Francis of frontier (Hatcher x), patron saint of American orchards (Price, 253) and one of America's half dozen favorite folk heroes (Price, Johnny, xii). Chapman (1774-1845) did in fact migrate from his home state of Massachusetts through Pennsylvania and into Ohio and Indiana, establishing apple tree nurseries that benefited later homesteaders; as his chief biographer Robert Price elaborates, Chapman operated in edge of wilderness just ahead of main settlements and, because of mix of his trail-blazing, benevolence and idiosyncrasy, had an inordinate knack for leaving talk spinning behind (Price, 79). As Edward Hoagland notes, however, legend of has been mainly inscribed in children's (170), and narratives promulgated by Walt Disney and generations of American children's book writers, in Michael Pollan's account, invariably substitute a cheap, fake sweetness for real thing (7). Returning to roots of legend through an examination of Appleseed's literary debut in James M'Gaw's little-known 1858 novel Philip Seymour, or Pioneer Life in Richland County, Ohio begins to rectify historical problem of sweetening and attenuation of narrative. Particularly in its fidelity to irreducible strangeness of Appleseed, novel argues for multifarious importance of for adults. Despite plasticity and durability of as an American legend, little if any critical attention in fact been paid to as literary character. Price usefully surveyed literature of and pinpointed several books that have proved crucial in giving story impulse and direction (Price, Johnny 9),1 but neither he nor subsequent historians and literary critics provided any sustained exegesis of those books. Although Price recognizes Philip Seymour as a powerful literary influence on unfolding legend (Johnny 249) and notes innovations that M'Gaw brings to it, he rebukes novel for being merely a thin, highly plot in Scott and Cooper tradition (Johnny 250). In ignoring novel, subsequent literary historians and critics implicitly concur with Price's judgment. M'Gaw himself, according to his publisher Roeliff Brickerhoff, born in Pennsylvania ini 823 and moved with his family to Ohio 10 years later; in 1854 family relocated to Richland county in Ohio, setting for events of Philip Seymour. An Ohio schoolteacher for much of his life, M'Gaw was licensed to preach but never took settled charge (Brinkerhoff xxi). While regarding him as something of romantic (xix), Brinkerhoff praises M'Gaw for his local historic and archaeologic investigations (xix) and for his work in preservation (xx) of many items of Ohio's early history. Philip Seymour may well be work of historical preservationist, but Brinkerhoff, as well as more recent critics, underestimates conscious literariness of M'Gaw and overlooks M'Gaw's innovative use of in novel. …

An experimental study for effects of the discount display on the price judgment

An experimental study for effects of the discount display on the price judgment