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Determinants of Purchasing Behavior - On the Interaction of Price Anchors and the Framing of Price Changes

Author

Listed:
  • Caroline Dauenhauer

    (HHL Leipzig Graduate School of Management)

  • Jens K. Perret

    (International School of Management)

Abstract

Low involvement goods per definition do not require the customer to invest a significant amount of will-power into the purchasing decision. Thus, buying decisions in this context are primarily driven by the intuitive mind and relevant decision heuristics. This study focuses on the anchor and the framing heuristic, their combined effect on the willingness-to-buy of low involvement goods and especially their interaction effect. It is established that of the two heuristics considered, the framing effect is the more relevant with an impact roughly 2.5 times the size of the anchor effect. An interaction effect between the two heuristics exists even though it is only weakly significant and only marginally impacts the willingness-to-buy, reporting an effect size of one fifth of the anchor effect. Although limited in its scope the weakly significant interaction effect shows that in certain retail environments price reduction have a more pronounced effect than in others. The study provides relevant insights from a theoretical academic perspective and offers advice to marketing practioners, in particular advertising experts.

Suggested Citation

  • Caroline Dauenhauer & Jens K. Perret, 2021. "Determinants of Purchasing Behavior - On the Interaction of Price Anchors and the Framing of Price Changes," EIIW Discussion paper disbei299, Universitätsbibliothek Wuppertal, University Library.
    • Handle: RePEc:bwu:eiiwdp:disbei299
    as

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    References listed on IDEAS

    as
    1. Wright, William F. & Anderson, Urton, 1989. "Effects of situation familiarity and financial incentives on use of the anchoring and adjustment heuristic for probability assessment," Organizational Behavior and Human Decision Processes, Elsevier, vol. 44(1), pages 68-82, August.
    2. Jonathan E. Alevy & Craig E. Landry & John A. List, 2015. "Field Experiments On The Anchoring Of Economic Valuations," Economic Inquiry, Western Economic Association International, vol. 53(3), pages 1522-1538, July.
    3. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    4. Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
    5. Frisch, Deborah, 1993. "Reasons for Framing Effects," Organizational Behavior and Human Decision Processes, Elsevier, vol. 54(3), pages 399-429, April.
    6. Furnham, Adrian & Boo, Hua Chu, 2011. "A literature review of the anchoring effect," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(1), pages 35-42, February.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Purchasing; Behavior; Price Anchor; Framing; Prospect Theory; Discounter;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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