How Much Does the Market Value an Improvement in a Product Attribute?
Marketing Science
The Impact of Utility Balance and Endogeneity in Conjoint Analysis
Marketing Science
Product Variety and Endogenous Pricing with Evaluation Costs
Management Science
The Price Precision Effect: Evidence from Laboratory and Market Data
Marketing Science
Trust-Assuring Arguments in B2C E-commerce: Impact of Content, Source, and Price on Trust
Journal of Management Information Systems
Dynamic Pricing of Limited Inventories When Customers Negotiate
Operations Research
Consumer Deliberation and Product Line Design
Marketing Science
Electronic Commerce Research and Applications
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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.