Author: 

Kholekile L. Gwebu, Jing Wang, Andrew Wei Hao , Michael Y. Hu

Abstract: 

This article examines how price cues can be used strategically to influence consumers' perceptions and bid judgments in Name-Your-Own-Price (NYOP) auctions. It focuses on three specific types of price cues: a low and plausible price cue, a high but implausible price cue, and a range price cue that is bounded at the upper end by the high price cue and at the lower end by the low price cue. A controlled experiment indicates that consumers perceive the range and low price cue as more useful in aiding their bidding decisions than the high price cue. The range and low price cue positively impact bidders’ confidence in winning while the high price cue reduces their confidence level. Interestingly, consumers’ value and bid judgments’ can be influenced by the high price cue even though they view it with skepticism. The low end of a range price cue is found to have a greater impact on consumers’ perceptions and bid judgments than the high end, possibly because a range price cue has the potential to make loss aversion more pronounced.

Key Word: 

Published Date: 

February, 2011

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