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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