Placebo Effects of Marketing Actions: Consumers May Get What They Pay for

42 Pages Posted: 28 Sep 2020

See all articles by Baba Shiv

Baba Shiv

Stanford Graduate School of Business

Ziv Carmon

INSEAD

Dan Ariely

Duke University - Fuqua School of Business

Date Written: February 2, 2005

Abstract

We demonstrate that marketing actions such as pricing can alter the actual efficacy of products to which they are applied. These placebo effects stem from activation of expectancies about the efficacy of the product, a process that appears not to be conscious. In three experiments we show that consumers paying a discounted price for a product (e.g., an energy drink thought to increase mental acuity) can end up deriving less actual benefit from consuming this product (e.g., they are able to solve fewer puzzles) compared to consumers who purchase and consume the exact same product but pay its regular price. Our studies consistently support the role of expectancies in mediating this placebo effect. We conclude by discussing theoretical, managerial and public policy implications of the findings.

Keywords: Placebo effects, marketing effects, price as a quality cue

Suggested Citation

Shiv, Baba and Carmon, Ziv and Ariely, Dan, Placebo Effects of Marketing Actions: Consumers May Get What They Pay for (February 2, 2005). MIT Sloan Research Paper No. 4533-05, Available at SSRN: https://ssrn.com/abstract=707541 or http://dx.doi.org/10.2139/ssrn.707541

Baba Shiv (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-725-8122 (Phone)

Ziv Carmon

INSEAD ( email )

1 Ayer Rajah Ave
Singapore, 138676
Singapore

Dan Ariely

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
(919) 381-4366 (Phone)

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