The Discriminating Consumer: Product Proliferation and Willingness to Pay for Quality
ESADE Business School
Georgetown University McDonough School of Business
Sheena S. Iyengar
Columbia Business School - Management Division
August 16, 2012
Journal of Marketing Research, Vol. 49, No. 1, 2012
The authors propose that a crowded product space motivates consumers to better discriminate between choice options of different quality. Specifically, this article reports evidence from three controlled experiments and one natural experiment that people are prepared to pay more for high-quality products and less for low-quality products when they are considered in the context of a dense, as opposed to a sparse, set of alternatives. To explain this effect, the authors argue that consumers uncertain about the importance of quality learn from observing market outcomes. Product proliferation reveals that other consumers care to discriminate among similar alternatives, and this inference in turn raises the importance of quality in decision-making.
Keywords: Product Proliferation, Consumer Inference, Price-Quality Trade-Offs, Willingness to Pay, Behavioral Eonomics
Date posted: January 21, 2010 ; Last revised: August 17, 2012
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