Anchoring Effects on Consumers' Willingness-to-Pay and Willingness-to-Accept

Stanford GSB Working Paper No. 1787

38 Pages Posted: 1 Oct 2003

See all articles by Itamar Simonson

Itamar Simonson

Stanford University; Stanford Graduate School of Business

Aimee Drolet

University of California, Los Angeles (UCLA) - Marketing Area

Date Written: October 2003

Abstract

When purchasing products, consumers often need to decide on the highest price they are willing to pay (WTP) and, when selling products, on the lowest price they are willing to accept (WTA). In this research, we contrast the determinants of WTP and WTA judgments and investigate their susceptibility to influence by arbitrary anchors that are unrelated to the product value. Consistent with our analysis, we demonstrate in a series of studies that purchase, but not selling, prices are influenced by arbitrary anchors (e.g., the last two digits of the person's social security number), even when such anchors are rejected as possible purchase/selling prices. Conversely, selling, but not purchase, prices are influenced by arbitrary anchors relating to the perceived market price of the product. The results also indicate that selling prices become sensitive to arbitrary anchors that are considered as possible prices, if the uncertainty about the value of the product to the consumer is made salient. We discuss the implications of these findings with respect to our understanding of the determinants of consumers' willingness-to-pay and willingness-to-accept, value-based pricing, and the anchoring effect.

Suggested Citation

Simonson, Itamar and Drolet, Aimee, Anchoring Effects on Consumers' Willingness-to-Pay and Willingness-to-Accept (October 2003). Stanford GSB Working Paper No. 1787, Available at SSRN: https://ssrn.com/abstract=383341 or http://dx.doi.org/10.2139/ssrn.383341

Itamar Simonson (Contact Author)

Stanford University ( email )

Stanford, CA 94305
United States

Stanford Graduate School of Business ( email )

655 Knight Center
Stanford, CA 94305-5015
United States

Aimee Drolet

University of California, Los Angeles (UCLA) - Marketing Area ( email )

110 Westwood Plaza, Gold Hall 406
UCLA Anderson School
Los Angeles, CA 90095-1481
United States
310-206-4278 (Phone)
310-206-7422 (Fax)

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