The Uncertain Value of Uncertainty: When Consumers are Unwilling to Pay for What They Like

51 Pages Posted: 27 Oct 2015 Last revised: 1 Mar 2017

Alice Moon

Disney Research

Leif D. Nelson

University of California, Berkeley - Haas School of Business

Date Written: October 19, 2015

Abstract

When trying to understand consumer preference, it seems reasonable to assume that all preference measures (e.g., pricing measures, such as willingness-to-pay, and rating measures, such as enjoyment) will make similar predictions about what consumers actually prefer. For instance, if consumers report willing to pay a high amount for a product, marketing researchers would predict that consumers like that product, and if consumers report expecting to greatly enjoy a product, they would similarly predict that consumers like that product. Across eight studies (N = 6888), we challenge this assumption and find that at times, these measures make divergent predictions about consumer preference. Namely, uncertain prospects are evaluated negatively with pricing measures and positively with rating measures. Our results support the idea that this discrepancy arises because pricing measures are determined by additional market factors, such as perceived selling price, that overwhelm considerations of preference. We empirically rule out alternative explanations and discuss crucial implications of our effects for both theory and applications.

Keywords: Willingness-to-pay, Enjoyment, Uncertainty, Measurement

JEL Classification: M30, M31

Suggested Citation

Moon, Alice and Nelson, Leif D., The Uncertain Value of Uncertainty: When Consumers are Unwilling to Pay for What They Like (October 19, 2015). Available at SSRN: https://ssrn.com/abstract=2676699 or http://dx.doi.org/10.2139/ssrn.2676699

Alice Moon (Contact Author)

Disney Research ( email )

4720 Forbes Avenue
LL
Pittsburgh, PA 15213
United States

Leif D. Nelson

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

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