When Internal Reference Prices and Price Expectations Diverge: The Role of Confidence

Journal of Marketing Research, Forthcoming

27 Pages Posted: 22 Nov 2006

See all articles by Manoj Thomas

Manoj Thomas

Cornell University - Samuel Curtis Johnson Graduate School of Management

Geeta Menon

New York University - Stern School of Business

Abstract

When do internal reference prices differ from articulated price expectations? The authors propose that the internal reference price depends not only on the magnitude of the expected price, but also on the confidence associated with this expectation. Four experiments delineate the effects of price expectation and confidence on the internal reference price. In experiments 1 and 2 the authors manipulate repetition and examine the effects of repetition-induced confidence on price judgments. In experiments 3 and 4 they manipulate confidence directly to investigate its effects on judgments. Results from all four experiments suggest that consumers with less confidence have higher internal reference prices than more confident consumers, even when they do not differ in their articulated price expectations. The implications of these results for pricing theory are discussed.

Suggested Citation

Thomas, Manoj and Menon, Geeta, When Internal Reference Prices and Price Expectations Diverge: The Role of Confidence. Journal of Marketing Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=946227

Manoj Thomas (Contact Author)

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

353 Sage Hall
Ithaca, NY 14853
United States
607-255-7207 (Phone)
607-254-4590 (Fax)

HOME PAGE: http://forum.johnson.cornell.edu/faculty/mthomas/

Geeta Menon

New York University - Stern School of Business ( email )

Tisch Hall, 40 W 4 St
#806
New York, NY 10012
United States

HOME PAGE: http://www.stern.nyu.edu/~gmenon

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