Choice behavior of information services when prices are increased and decreased from reference level

Merja Halme () and Outi Somervuori ()

Annals of Operations Research, 2013, vol. 211, issue 1, 549-564

Abstract: The purpose of this study is to estimate the impact of price increases and decreases for three, at least partly, compensatory services. The existence of a reference effect in pricing has been commonly accepted. However, the observations of consumer choices with prices below and above the reference price have produced mixed results. Both symmetric and asymmetric behavior has been observed. The current study differs from the mainstream in the way that the object is a service and instead of scanner panel data, stated preferences measured by choice based conjoint analysis are used. Moreover, instead of dealing with changes in value caused by price changes, we consider changes in demand on the respondent level. The main outcome of the study was that with the traditional service the respondents reacted more strongly to price increases (loss) than to price decreases (gain), whereas in the two more modern services the reactions were more versatile; with the majority of respondents the reactions were stronger to price decreases (gain). Copyright Springer Science+Business Media New York 2013

Keywords: Reference price; Asymmetric price behavior; Prospect theory; Services (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1007/s10479-013-1350-3 (text/html)
Access to full text is restricted to subscribers.

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:spr:annopr:v:211:y:2013:i:1:p:549-564:10.1007/s10479-013-1350-3

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10479

DOI: 10.1007/s10479-013-1350-3

Access Statistics for this article

Annals of Operations Research is currently edited by Endre Boros

More articles in Annals of Operations Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().