چگونگی تاثیر مقایسه اجتماعی بر شکل گیری قیمت مرجع در زمینه خدمات

Abstract What is the influence on reference price when the source of price information is anonymous versus social? This article investigates the formation of reference prices given an observed sequence of past prices in a service context. An experimental study suggests that, considering the same price information, if the source is social (i.e., the prices paid by colleagues), then consumers want to pay less. More specifically, social comparison changes the way individuals weigh information, attributing more importance to the lowest historical prices and to the range in price variations.

. Introduction Imagine you want to book a hotel room. Some weeks in advance, you check prices on the Internet. Because of dynamic pricing practices, you are accustomed to seeing variability every time you check for a price. To judge whether the offered price is a “fair deal”, you recall past prices you might have seen or paid for this or a similar service. Alternately, friends or colleagues may have informed you of how much they paid for the same hotel. The amount you or others have observed/paid in the past influences your reference price, which can be considered the basis to judge the deal you are offered. Research over the last 30 years corroborates that reference points dramatically affect people’s decisions. According to psychologists (Lewin et al., 1944 and Siegel, 1957), reference points are often defined as the decision maker’s status quo or as an expectation. Kahneman and Tversky (1979) transferred the concept of reference dependence from psychology to behavioral economics, explaining that people frame outcomes as gains or losses relative to relevant reference points. The relevant literature examines the effect of reference points in the price domain, that is, on reference prices (Briesch et al., 1997 and Mazumdar et al., 2005), and the topic relates to research on new pricing mechanisms, such as bidding behavior (Wolk & Spann, 2008) and pay-what-you want pricing (Johnson & Cui, 2013). Two main conceptualization models are available on reference price. The most common is that reference prices are predictive price expectations. This model, named the expectation-based reference price, is derived from adaptation theory (Helson, 1964) and implies that people judge a stimulus in relation to the level to which they have adapted (Mazumdar et al., 2005). In a second model, reference price is a normative price, that is, the price considered as fair for the seller to charge (Bolton et al., 2003 and Campbell, 1999). Both economic and social components have been shown to affect evaluations of price fairness. The conceptualization used generally depends on the market, customer group, and product/service involved. The way people form their reference price becomes particularly relevant in contexts where favorable conditions for price discrimination occur, as consumers can easily pay a different price for the same product or service. Accordingly, price comparison is a consequence of dynamic pricing or price discrimination. Although several studies suggest that time-based pricing strategies tend to be accepted by consumers, price discrimination may be perceived as unfair if standard conventions are violated (Huang et al., 2005 and Wirtz and Kimes, 2007). Social comparison theory (Van den Bos, Wilke, Lind, & Vermunt, 1998) offers a potential underpinning for some of these results and highlights a possible threat for the acceptability of these pricing strategies. The awareness that another similar consumer paid a lower price appears to be a particularly potent source of perceived unfairness (Haws & Bearden, 2006), a factor that may reduce the reference price. Research has not revealed a direct elicitation of reference prices in a time-based pricing context between different sources of information. Thus, our goal is to determine if the source of information of past prices, whether social (i.e., prices that friends or colleagues have paid for a similar product or service in the past) or anonymous (i.e., market prices the individual has observed in the past), can influence the formation of the reference price in its normative conceptualization. This study creates several scenarios where different prices for the same service (a hotel room reservation) become available, seeking to elicit the impact of past price information on reference prices. More precisely, Section 2 discusses the theoretical underpinning of the research hypotheses. Section 3 then uses an experimental setting to investigate whether the same price sequence can produce a different reference price depending on the source of information (social or anonymous) and how individuals attribute weights to past information that can predict the reference price. Finally, Section 4 discusses the results and their managerial implications.

. General conclusions The experiment presented herein indicates that the source of information, social or anonymous, affects the formation of reference prices. This article builds on some studies regarding sequences (Ariely and Zauberman, 2000 and Baucells et al., 2011), controlling in addition for the presence of social influence. The evidence suggests that when a social influence is present, people lower their reference price, while if the source of information is anonymous, people are more inclined to average past prices. People tend not to place too much emphasis on the order in which prices appeared in time, but rather give more attention to the magnitude of these prices. These findings, however, seem to be a peculiarity of the service context given that in finance (Baucells et al., 2011), people are much more influenced by the order in which prices appeared in time. In the social case, a two-parameter weighting function based on magnitude price sorting describes the reference price formation process. Our estimates show the importance of extreme rather than central values in the price sequence, as well as the predominant weight given to the lowest – and thus more favorable – price information. Important managerial implications for marketers that charge different prices emerge from this study. The awareness of reference dependence may facilitate the understanding of online consumer behavior while shaping pricing and discounting policies (Kopalle, Rao, & Assunção, 1996). If prices are maintained at an anonymous level, these findings suggest low prices and variability have limited influence on reference prices, thus somehow suggesting that revenue management and consumers now accept time-based pricing practices. Nonetheless boundary conditions apply in markets where social comparison is more intense because customers care about what others (from a referent group) are paying. The negative effect of social comparison on reference price highlights how preferential treatments given to some customers may induce an uneasy feeling, thereby leading to the perception of unfairness as well as the relative lowering of the reference price. Limiting the diffusion of such information, however, may not be feasible as consumers who are satisfied with their purchases tend to talk about the purchases (Brown, Barry, Dacin, & Gunst, 2005) and share relevant information (Bickart & Schindler, 2001). Therefore, differences in prices must be transparent and rational. Marketers should combine price variations with customization or personalization as it will reduce comparability between transactions. Generally, it is important to separate consumers who pay less from those consumers who possess appropriate fencing conditions. Observing sequences with extreme prices, people tend to punish for high prices (losses from a consumer perspective), giving strong weight to low prices in the determination of the reference price. This confirms one of the hypotheses from prospect theory: losses loom larger than gains. If the market consists only of loss-averse buyers and if comparisons with similar others are frequent, then the optimal strategy for firms would be to limit price variability. The experiment involved student participants and service purchase scenarios. We are aware that presenting student participants with a hypothetical design in a lab is less than ideal. For this reason, we acknowledge that the size of these effects could be biased, and therefore, the results should be independently replicated before jumping to conclusions. Nonetheless, methodological concerns regarding the hypothetical design would, in principle, only weaken the size of the effects, while the impact of dynamic pricing may be even more pronounced when varying prices are encountered in realistic shopping online environments under conditions of higher involvement. In the presented experiment, the past information was available on the screen. The highly weighted results of the first prices could be explained by the fact that “participants may not have clear preferences about the value of a product and rely on past prices to provide an indication of what such value is” (Sitzia & Zizzo, 2012). Nonetheless, although new online platforms present a chart of previous prices (Drechsler & Natter, 2011), if these prices are not available, memory constraints become relevant. Generally, the role of memory in recalling past prices would be an interesting research question. Aside from memory, however, reference prices are influenced by many other factors, such as decision delays, and social comparisons. While the study design includes many of the factors that may impact reference prices, it may have excluded others. Future research should explore whether different price situations or different sources of social information, i.e., people higher or lower in a social rank, generate a divergent effect on reference price. The closeness of the relationship with comparison consumers should increase the sensitivity of the source of information on the reference price, thus affecting judgment regarding fairness.