How social comparison influences reference price formation in a service context

Giampaolo Viglia, Graziano Abrate

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Abstract

What is the influence on reference price when the source of price information is anonymous versus social? This article investigates the formation of reference prices given an observed sequence of past prices in a service context. An experimental study suggests that, considering the same price information, if the source is social (i.e., the prices paid by colleagues), then consumers want to pay less. More specifically, social comparison changes the way individuals weigh information, attributing more importance to the lowest historical prices and to the range in price variations.
Original languageEnglish
Pages (from-to)168-180
Number of pages13
JournalJournal of Economic Psychology
Volume45
Early online date2 Oct 2014
DOIs
Publication statusPublished - Dec 2014

Keywords

  • Reference price
  • Social comparison
  • Dynamic pricing
  • Prelec weighting function

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