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

Luc Wathieu () and Marco Bertini ()
Additional contact information
Luc Wathieu: Harvard Business School, Soldiers Field, Boston, Massachusetts 02163
Marco Bertini: London Business School, Regent's Park, London, NW1 4SA United Kingdom

Marketing Science, 2007, vol. 26, issue 1, 118-129

Abstract: 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.

Keywords: production differentiation; marketing strategy; consumer behavior; pricing; cost of thinking; entry decision; consumer empowerment (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

Downloads: (external link)
http://dx.doi.org/10.1287/mksc.1060.0222 (application/pdf)

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:inm:ormksc:v:26:y:2007:i:1:p:118-129

Access Statistics for this article

More articles in Marketing Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().