Impact of preciseness of price presentation on the magnitude of compromise and decoy effects

Yuanyuan (Gina) Cui, Seongseop (Sam) Kim, Jungkeun Kim

Research output: Journal article publicationJournal articleAcademic researchpeer-review

3 Citations (Scopus)

Abstract

This study aims to test the impact of price preciseness on compromise and decoy effects, analyze the different presentation styles of price information (a precise price presentation vs. a rounded one), and investigate the moderating role of individual differences (i.e., lay rationalism) and decision situations (i.e., time pressure) in travel decision making. It uses a series of empirical tests in which only people with high lay rationalism can distinguish the difference between precise and rounded price information. Major findings show that compromise and decoy effects are salient when a price cue exists, as price information helps the trade-off among options. This study also finds that significant context effects prevail irrespective of price preciseness. Respondents with high lay rationalism or under high time pressure conditions show a tendency to acknowledge discrepancies among options for precise pricing in decision making but not for rounded pricing, thereby resulting in high decoy effects.

Original languageEnglish
Pages (from-to)641-652
Number of pages12
JournalJournal of Business Research
Volume132
DOIs
Publication statusPublished - Aug 2021

Keywords

  • Compromise effect
  • Decoy effect
  • Lay rationalism
  • Price
  • Price preciseness
  • Time pressure

ASJC Scopus subject areas

  • Marketing

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