The Impact of Price Sequences on Preference and Choice

Eric Dolansky, University of Western Ontario, Canada
Kyle B. Murray, University of Western Ontario, Canada
Mark Vandenbosch, University of Western Ontario, Canada
There currently exist many situations where prices are presented as part of a perceptible sequence, as opposed to in isolation from past prices. Despite this, research on pricing typically examines the impact of a single price. Three studies show that the the mean, trend and variance of a price sequence can produce a significant effect on choice. It was found that (a) subjects make irrational decisions based on price sequences, (b) mean and trend matter less than variance and (c) what individuals perceive as variance is different from actual variance.
[ to cite ]:
Eric Dolansky, Kyle B. Murray, and Mark Vandenbosch (2008) ,"The Impact of Price Sequences on Preference and Choice", in NA - Advances in Consumer Research Volume 35, eds. Angela Y. Lee and Dilip Soman, Duluth, MN : Association for Consumer Research, Pages: 641-643.