When Internal Reference Prices and Price Expectations Diverge: The Role of Confidence
Journal of Marketing Research, Forthcoming
27 Pages Posted: 22 Nov 2006
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.
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