Battle royal: Zero-price effect vs relative vs referent thinking

Juan Nicolau ()

Marketing Letters, 2012, vol. 23, issue 3, 669 pages

Abstract: This article confronts three psychological influences: relative thinking, referent thinking, and the zero-price effect. The experiment conducted in the context of bundles with complementary components, confirms previous evidence around the dominance patterns between relative and referent thinking when the bargain is a discount; however, when the discount is changed to a free product (worth the same as the discount), the zero-price effect arises. Specifically: (1) if actual price coincides with expected price, relative thinking is the norm, unless the zero-price effect appears; (2) if actual price moderately deviates from expected price, referent thinking is superior to any other effects, relative thinking and the zero-price effect; and (3) if the deviation is extreme, a battle royal among influences takes place: relative thinking beats referent thinking as long as the zero-price effect does not appear. If the zero-price effect is present, it will cancel referent thinking and reverse relative thinking. Copyright Springer Science+Business Media, LLC 2012

Keywords: Relative thinking; Referent thinking; Zero-price effect (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (6)

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DOI: 10.1007/s11002-012-9169-2

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