Examining price variation sensitivity with surveys and the relevance of Weber’s law

Ronald B. Larson () and Anna Tauscher ()
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Ronald B. Larson: Luther College
Anna Tauscher: Luther College

Journal of Revenue and Pricing Management, 2025, vol. 24, issue 3, No 5, 254-265

Abstract: Abstract Psychologists have tested the concept of just-noticeable-differences (Weber’s Law) and found it to be valid for many sensory phenomena. Marketers have applied this idea to pricing, suggesting that relatively small price changes should not be noticed and the response to changes should be related to the magnitude of the base prices. This study uses two surveys of US adults to test this principle for furniture purchases and develops profiles of the individuals who respond in ways consistent with it. Because more than 45 percent of subjects said they would respond to small percentage changes in price, the analysis provides limited support for the concept of just-noticeable-differences. The analyses of the profiles for the price change responses concludes that three measures are important: time preferences, risk preferences, and social desirability bias (SDB). Researchers should incorporate these measures into their models to improve price sensitivity estimates.

Keywords: Just-noticeable-difference; Price thresholds; Time preferences; Risk preferences; Social desirability bias; Fechner’s law (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1057/s41272-024-00514-5

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