Price as a Stimulus to Think: The Case for Willful Overpricing

Wathieu, Luc; Bertini, Marco
January 2007
Marketing Science;Jan/Feb2007, Vol. 26 Issue 1, p118
Academic Journal
Consumers aware of a new benefit will often experience uncertainty about its personal relevance or usage value. This paper shows that the decision to deliberate further to resolve this uncertainty and reach a polarized judgment of personal relevance critically depends on the posted price. In particular, a price above the consumer's initial willingness to pay might be thought provoking and enhance the perception of relevance with a certain probability. This behavioral mechanism is introduced formally and by way of an experiment with reference to the purchase of organic lettuce and fair-trade coffee. Accounting for the effect of price as a stimulus to think, a monopolistic firm should either over price ("transgressive pricing") or under price ("regressive pricing") in comparison to the consumer's willingness to pay. Under certain circumstances, the firm should also empower consumers with means that reduce the effort of deliberation.


Related Articles

  • “Says Who?!” How the Source of Price Information and Affect Influence Perceived Price (Un)fairness. Campbell, Margaret C // Journal of Marketing Research (JMR);May2007, Vol. 44 Issue 2, p261 

    Three experiments show that the source of price change information—whether human or nonhuman—moderates the effect of price change on perceptions of price fairness. Both inferences of the marketer's motive and stimulus-induced affect mediate the effects of the source and price...

  • THE TWO SIDES OF JOE JONES. Hackett, Otis // Motorcycle Product News;Jun2010, Vol. 36 Issue 6, p30 

    The article presents information on the different types of customers. It says that there are two types of customers, the customers who are in need and the customer who just want to buy the product. It mentions that the customers who just want the product are usually the customer who can afford...

  • Using a generalized linear mixed model to analyze dichotomous choice contingent valuation data. Langford, Ian H. // Land Economics;Nov94, Vol. 70 Issue 4, p507 

    Willingness-to-pay (WTP) responses from dichotomous choice contingent valuation studies are often modeled using logistic regression, from which estimates of mean or median WTP are calculated. However, a great many factors influence an individual's WTP, some of which may be unobserved. Hence, the...

  • Selling cost vs. price. Farber, Barry // Entrepreneur;Apr2009, Vol. 37 Issue 4, p62 

    The article presents advice on attracting and retaining customers for firms that have little scope to lower their prices. In the author's view customers need to be educated on the full benefits delivered for a given price including customer service and product quality. A key distinction to make...

  • Experiments on the difference between willingness to pay and willingness to accept: Comment. Brown, Thomas C. // Land Economics;Nov94, Vol. 70 Issue 4, p520 

    The author clarifies points of contention made by the authors of his the about the difference between willingness to pay (WTP) and willingness to accept (WTA). A significant disparity between WTP and WTA has repeatedly been found in both hypothetical and simulated markets. The implications of...

  • Improving validity experiments of contingent valuation methods: Results of efforts to reduce the... Loomis, John; Brown, Thomas; Lucero, Beatrice; Peterson, George // Land Economics;Nov96, Vol. 72 Issue 4, p450 

    Independent samples and paired responses of adults were used to test differences between hypothetical and actual willingness to pay (WTP) for an art print elicited using an open-ended WTP question. We attempted to overcome hypothesized reasons for divergences between cash and hypothetical WTP by...

  • Nonparametric Estimation of Mean Willingness to Pay from Discrete Response Valuation Data. Watanabe, Masahide // American Journal of Agricultural Economics;Jul2010, Vol. 92 Issue 4, p1114 

    This article develops a nonparametric method to consistently estimate mean willingness to pay (WTP) in various discrete response valuation methods. The advantage of this method is that it can consistently estimate unconditional mean WTP with astonishing ease under some assumptions of the bid...

  • Perceived Price Fairness: A New Look at an Old Construct. Martins, Marielza; Monroe, Kent B. // Advances in Consumer Research;1994, Vol. 21 Issue 1, p75 

    The value of a product is postulated by Monroe (1990) to be a tradeoff between the perceived benefits, or quality, offered by the product, and the sacrifice, both monetary and non-monetary, perceived as necessary to acquire it. The price-quality relationship research stream has identified brand,...

  • Pay What You Want as a Marketing Strategy in Monopolistic and Competitive Markets. Schmidt, Klaus M.; Spann, Martin; Zeithammer, Robert // Management Science;Jun2015, Vol. 61 Issue 6, p1217 

    Pay what you want (PWYW) can be an attractive marketing strategy to price discriminate between fair-minded and selfish customers, to fully penetrate a market without giving away the product for free, and to undercut competitors that use posted prices. We report on laboratory experiments that...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics