IDEAS home Printed from https://ideas.repec.org/a/eee/joreco/v71y2023ics0969698922002764.html
   My bibliography  Save this article

The reference price effect of historical price lists in online auctions

Author

Listed:
  • Liu, Xiaotian
  • Popkowski Leszczyc, Peter T.L.

Abstract

This study investigates the reference price effect of historical price lists—which are provided in the auction description—on ending prices. This paper estimates and compares three different theories for the reference price effect of price lists: adaptation-level theory, range theory and range-frequency theory. In contrast to previous research, we find support for range theory. Specifically, the maximum price on the historical price list positively impacts the auction ending price, while the price range has a negative effect. Furthermore, the reference price effects are attenuated by the number of prices on the list and the type of product sold.

Suggested Citation

  • Liu, Xiaotian & Popkowski Leszczyc, Peter T.L., 2023. "The reference price effect of historical price lists in online auctions," Journal of Retailing and Consumer Services, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:joreco:v:71:y:2023:i:c:s0969698922002764
    DOI: 10.1016/j.jretconser.2022.103183
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969698922002764
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jretconser.2022.103183?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Stephanie Rosenkranz & Patrick W. Schmitz, 2007. "Reserve Prices in Auctions as Reference Points," Economic Journal, Royal Economic Society, vol. 117(520), pages 637-653, April.
    2. Mayhew, Glenn E & Winer, Russell S, 1992. "An Empirical Analysis of Internal and External Reference Prices Using Scanner Data," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 19(1), pages 62-70, June.
    3. Anwar, Sajid & McMillan, Robert & Zheng, Mingli, 2006. "Bidding behavior in competing auctions: Evidence from eBay," European Economic Review, Elsevier, vol. 50(2), pages 307-322, February.
    4. Preeti Narwal & J. K. Nayak, 2020. "Investigating relative impact of reference prices on customers’ price evaluation in absence of posted prices: a case of Pay-What-You-Want (PWYW) pricing," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(4), pages 234-247, August.
    5. Briesch, Richard A, et al, 1997. "A Comparative Analysis of Reference Price Models," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 24(2), pages 202-214, September.
    6. Lichtenstein, Donald R & Bearden, William O, 1989. "Contextual Influences on Perceptions of Merchant-Supplied Reference Prices," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 16(1), pages 55-66, June.
    7. Pecot, Fabien & Merchant, Altaf, 2022. "Why and when is older better? The role of brand heritage and of the product category in the evaluation of brand longevity," Journal of Business Research, Elsevier, vol. 140(C), pages 533-545.
    8. Nelson, Phillip, 1970. "Information and Consumer Behavior," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 311-329, March-Apr.
    9. Klein, Lisa R., 1998. "Evaluating the Potential of Interactive Media through a New Lens: Search versus Experience Goods," Journal of Business Research, Elsevier, vol. 41(3), pages 195-203, March.
    10. Gerald Häubl & Peter T L Popkowski Leszczyc & Mary Frances Luce & Gita V Johar & Rebecca W Hamilton, 2019. "Bidding Frenzy: Speed of Competitor Reaction and Willingness to Pay in Auctions," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 45(6), pages 1294-1314.
    11. Prakash, David & Spann, Martin, 2022. "Dynamic pricing and reference price effects," Journal of Business Research, Elsevier, vol. 152(C), pages 300-314.
    12. Lawson, Cornelia & Geuna, Aldo & Finardi, Ugo, 2021. "The funding-productivity-gender nexus in science, a multistage analysis," Research Policy, Elsevier, vol. 50(3).
    13. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    14. Edieal J. Pinker & Abraham Seidmann & Yaniv Vakrat, 2003. "Managing Online Auctions: Current Business and Research Issues," Management Science, INFORMS, vol. 49(11), pages 1457-1484, November.
    15. Bruce G. S. Hardie & Eric J. Johnson & Peter S. Fader, 1993. "Modeling Loss Aversion and Reference Dependence Effects on Brand Choice," Marketing Science, INFORMS, vol. 12(4), pages 378-394.
    16. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
    17. Dan R Schley & Bart De Langhe & Andrew R Long & Vicki G Morwitz & Chris Janiszewski, 2020. "System 1 Is Not Scope Insensitive: A New, Dual-Process Account of Subjective Value," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 47(4), pages 566-587.
    18. Janiszewski, Chris & Lichtenstein, Donald R, 1999. "A Range Theory Account of Price Perception," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 25(4), pages 353-368, March.
    19. Reynolds, Kristy E. & Gilkeson, James H. & Niedrich, Ronald W., 2009. "The influence of seller strategy on the winning price in online auctions: A moderated mediation model," Journal of Business Research, Elsevier, vol. 62(1), pages 22-30, January.
    20. Han, Jidong & Popkowski Leszczyc, Peter T.L. & Zhang, Zelin, 2021. "Empirical Analyses of Nonlinear Effects of Reserve Prices on Ending Prices in Online Auctions," Journal of Interactive Marketing, Elsevier, vol. 54(C), pages 86-102.
    21. Stigler, George J., 2011. "Economics of Information," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 5, pages 35-49.
    22. Anna Dodonova & Yuri Khoroshilov, 2004. "Anchoring and transaction utility: evidence from on-line auctions," Applied Economics Letters, Taylor & Francis Journals, vol. 11(5), pages 307-310.
    23. Popkowski Leszczyc, Peter T.L. & Qiu, Chun & He, Yongfu, 2009. "Empirical Testing of the Reference-Price Effect of Buy-Now Prices in Internet Auctions," Journal of Retailing, Elsevier, vol. 85(2), pages 211-221.
    24. Katja Seim & Maria Ana Vitorino & David M. Muir, 2017. "Do consumers value price transparency?," Quantitative Marketing and Economics (QME), Springer, vol. 15(4), pages 305-339, December.
    25. Le, Anh-Tuan & Tran, Thao Phuong & Cheng, Tzu-Chang Forrest, 2022. "Do female directors mitigate asymmetric cost behavior? Evidence from international data," Finance Research Letters, Elsevier, vol. 49(C).
    26. Kamins, Michael A & Dreze, Xavier & Folkes, Valerie S, 2004. "Effects of Seller-Supplied Prices on Buyers' Product Evaluations: Reference Prices in an Internet Auction Context," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 30(4), pages 622-628, March.
    27. Xin Wang & Alan Montgomery & Kannan Srinivasan, 2008. "When auction meets fixed price: a theoretical and empirical examination of buy-it-now auctions," Quantitative Marketing and Economics (QME), Springer, vol. 6(4), pages 339-370, December.
    28. Michael H. Rothkopf, 1969. "A Model of Rational Competitive Bidding," Management Science, INFORMS, vol. 15(7), pages 362-373, March.
    29. Jeffrey E. Mcgee & Olukemi O. Sawyerr, 2003. "Uncertainty and Information Search Activities: A Study of Owner–Managers of Small High‐Technology Manufacturing Firms," Journal of Small Business Management, Taylor & Francis Journals, vol. 41(4), pages 385-401, October.
    30. Niedrich, Ronald W & Sharma, Subhash & Wedell, Douglas H, 2001. "Reference Price and Price Perceptions: A Comparison of Alternative Models," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 28(3), pages 339-354, December.
    31. Hoch, Stephen J & Ha, Young-Won, 1986. "Consumer Learning: Advertising and the Ambiguity of Product Experience," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 13(2), pages 221-233, September.
    32. Kalyanaram, Gurumurthy & Winer, Russell S., 2022. "Behavioral response to price: Data-based insights and future research for retailing," Journal of Retailing, Elsevier, vol. 98(1), pages 46-70.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ma, Deqing & Li, Kaifu & Hu, Jinsong & Wang, Xue, 2024. "How to leverage blockchain to react to consumer reference effects and develop a distribution strategy in online retailing?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 187(C).
    2. Li, Yuhao & Shi, Nan & Wang, Kanliang, 2024. "Study on the moderating effect of social distance on the bonus distribution scheme in online social referrals," Journal of Retailing and Consumer Services, Elsevier, vol. 78(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Popkowski Leszczyc, Peter T.L. & Qiu, Chun & He, Yongfu, 2009. "Empirical Testing of the Reference-Price Effect of Buy-Now Prices in Internet Auctions," Journal of Retailing, Elsevier, vol. 85(2), pages 211-221.
    2. Han, Jidong & Popkowski Leszczyc, Peter T.L. & Zhang, Zelin, 2021. "Empirical Analyses of Nonlinear Effects of Reserve Prices on Ending Prices in Online Auctions," Journal of Interactive Marketing, Elsevier, vol. 54(C), pages 86-102.
    3. Lillian L. Cheng & Kent B. Monroe, 2013. "An appraisal of behavioral price research (part 1): price as a physical stimulus," AMS Review, Springer;Academy of Marketing Science, vol. 3(3), pages 103-129, September.
    4. Bahník, Štěpán & Yoon, Sangsuk, 2023. "Anchoring effect in business," OSF Preprints 98qdv, Center for Open Science.
    5. Shunda, Nicholas, 2009. "Auctions with a buy price: The case of reference-dependent preferences," Games and Economic Behavior, Elsevier, vol. 67(2), pages 645-664, November.
    6. Mao, Zhixin & Duan, Yongrui & Liu, Wenxia, 2023. "Consumers’ choice of private label considering reference price and moderating effect," Journal of Retailing and Consumer Services, Elsevier, vol. 71(C).
    7. Santana, Shelle & Thomas, Manoj & Morwitz, Vicki G., 2020. "The Role of Numbers in the Customer Journey," Journal of Retailing, Elsevier, vol. 96(1), pages 138-154.
    8. Wolk, Agnieszka & Spann, Martin, 2008. "The effects of reference prices on bidding behavior in interactive pricing mechanisms," Journal of Interactive Marketing, Elsevier, vol. 22(4), pages 2-18.
    9. Jaikumar, Saravana & Sahay, Arvind, 2016. "Effect of Overlapping Price Ranges on Price Perception: Revisiting the Range Theory of Price Perception," IIMA Working Papers WP2016-02-02, Indian Institute of Management Ahmedabad, Research and Publication Department.
    10. Moon, Sangkil & Voss, Glenn, 2009. "How do price range shoppers differ from reference price point shoppers?," Journal of Business Research, Elsevier, vol. 62(1), pages 31-38, January.
    11. Ahrens, Steffen & Pirschel, Inske & Snower, Dennis J., 2017. "A theory of price adjustment under loss aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 78-95.
    12. Kopalle, Praveen K. & Kannan, P.K. & Boldt, Lin Bao & Arora, Neeraj, 2012. "The impact of household level heterogeneity in reference price effects on optimal retailer pricing policies," Journal of Retailing, Elsevier, vol. 88(1), pages 102-114.
    13. Schmöller, Arno, 2010. "Bidding Behavior, Seller Strategies, and the Utilization of Information in Auctions for Complex Goods," Munich Dissertations in Economics 11175, University of Munich, Department of Economics.
    14. Korgaonkar, Pradeep & Becerra, Enrique & O’Leary, Bay & Goldring, Deborah, 2010. "Product classifications, consumer characteristics, and patronage preference for online auction," Journal of Retailing and Consumer Services, Elsevier, vol. 17(4), pages 270-277.
    15. Park, Joo Heon & MacLachlan, Douglas L. & Love, Edwin, 2011. "New product pricing strategy under customer asymmetric anchoring," International Journal of Research in Marketing, Elsevier, vol. 28(4), pages 309-318.
    16. Caputo, Vincenzina & Lusk, Jayson L. & Nayga, Rodolfo M., 2018. "Choice experiments are not conducted in a vacuum: The effects of external price information on choice behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 335-351.
    17. Kevin Dayaratna & P. Kannan, 2012. "A mathematical reformulation of the reference price," Marketing Letters, Springer, vol. 23(3), pages 839-849, September.
    18. Anwar, Sajid & Zheng, Mingli, 2015. "Posted price selling and online auctions," Games and Economic Behavior, Elsevier, vol. 90(C), pages 81-92.
    19. Sheehan, Daniel & Hardesty, David M. & Ziegler, Alexander H. & Chen, Haipeng (Allan), 2019. "Consumer reactions to price discounts across online shopping experiences," Journal of Retailing and Consumer Services, Elsevier, vol. 51(C), pages 129-138.
    20. Preeti Narwal & J. K. Nayak, 2020. "Investigating relative impact of reference prices on customers’ price evaluation in absence of posted prices: a case of Pay-What-You-Want (PWYW) pricing," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(4), pages 234-247, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:joreco:v:71:y:2023:i:c:s0969698922002764. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/journal-of-retailing-and-consumer-services .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.