Price lower and then higher or price higher and then lower?

Stefania Sitzia and Daniel Zizzo

Journal of Economic Psychology, 2012, vol. 33, issue 6, 1084-1099

Abstract: The paper presents an experiment testing the hypothesis that, if consumers’ valuation of a product is shaped by past experiences of prices, it may be more profitable for firms to follow the opposite strategy of pricing higher and then lower. We ran an individual choice experiment with a posted offer market setup, where different dynamic pricing strategies were implemented. Anchoring to the past two prices under simple rules can describe the behavior of 3 out of 4 subjects. We find evidence of preference shaping and the profitability of a ‘high low’ pricing strategy under a wide range of assumptions.

Keywords: Consumer market; Dynamic price strategies; Shaping effects; Anchoring; Within-context rules; 2340; 2343; 2360; 3920; 3940 (search for similar items in EconPapers)
JEL-codes: C91 D03 D12 D21 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167487012000839
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:33:y:2012:i:6:p:1084-1099

DOI: 10.1016/j.joep.2012.07.006

Access Statistics for this article

Journal of Economic Psychology is currently edited by G. Antonides and D. Read

More articles in Journal of Economic Psychology from Elsevier
Bibliographic data for series maintained by Catherine Liu ().