The Role of Reference Points in Evaluating Price Information

The article presents information on several papers that discussed the role of reference points in evaluating price information. The first paper by Tom Meyvis and Alan Cooke examined how consumers evaluate and learn from prices when pricing information in inconsistent across retailers. The effects, the authors found that consumers who are motivated to learn and improve their choices tend to focus on the unfavorable comparisons, resulting in an often unwarranted belief that the chosen store is more expensive than the other stores. The second paper by S. Christian Wheeler discussed how social inferences combine with externally presented reference prices to determine how consumers evaluate purchase outcomes. In a series of three studies, he showed that script violations can change how people evaluate the negotiated price paid for an object, even when the objective outcome itself is constant. The third paper by Alexander Chernev compared two reverse auction price-elicitation strategies: price generation and price selection. Contrary to the common assumption that naming a price will be preferred by consumers because it offers the most precision in articulating one's willingness to pay, this research demonstrates that consumers often prefer to select rather than to generate a price.