The Role of Reference Price in Gift Registry Fulfillment: Empirical and Experimental Evidence
40 Pages Posted: 7 Aug 2010
Date Written: November 13, 2008
The authors examine the role of reference prices in a unique form of gift giving behavior - gift registries. A Hierarchical Bayesian analysis of fulfillment data from 555 online wedding registries and results from a laboratory experiment reveal that gift fulfillment probability follows a bimodal distribution around the average price of a gift registry. This is consistent with the hypothesis that gift purchases in the context of gift registries are driven by the average price of the registry, which serves as the reference price, and two competing motivations among gift givers: a desire for social benefits (e.g., to enhance relationship) and a desire for monetary benefits (e.g., to save money). The former motivation favors gift items with higher than average prices whereas the latter favors those with lower than average prices. This finding is robust after controlling for gift budget and relationship with the recipient. Our analysis also indicates that higher reference prices in the form of average price of the registry increase total gift spending from a registry, but only when gift givers are casual acquaintances to the recipient.
Keywords: registry gift giving, reference price, retailing
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