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Overpredicting and Underprofiting in Pricing Decisions
"... This research examines sellers ’ price-setting behavior and discovers a naturally occurring mismatch between sellers and buyers: Sellers who make a price decision often consider alternative prices and engage in the joint evaluation mode, whereas buyers who make a purchase decision see only the final ..."
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This research examines sellers ’ price-setting behavior and discovers a naturally occurring mismatch between sellers and buyers: Sellers who make a price decision often consider alternative prices and engage in the joint evaluation mode, whereas buyers who make a purchase decision see only the finally set price and are in the single evaluation mode. This mismatch in evaluation modes leads sellers to overpredict buyers ’ price sensitivity and underprice their products. However, these effects apply only to products unfamiliar to buyers and without salient reference prices and can be alleviated if sellers are encouraged to mimic single evaluation when making pricing decisions. These propositions are empirically tested and verified. Copyright © 2011 John Wiley & Sons, Ltd. key words evaluability; joint evaluation; preference reversal; prediction error Suppose that a seller introduces a new product to the market — for example, a new board game, and seeks to set a price so that he or she can maximize his or her profit. Suppose also that the seller has his or her exclusive channel to sell the product, and the product can only be sold at the price he or she sets. Will the price the seller sets be profit maximizing? If not, will it be too high or too low?
The Role of Money in Modern Macro Models
, 2013
"... “Research on Money in the Economy ” (ROME) is a private non-profit-oriented research network of and for economists, who generally are interested in monetary economics and especially are interested in the interdependences between the financial sector and the real economy. Further information is avail ..."
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“Research on Money in the Economy ” (ROME) is a private non-profit-oriented research network of and for economists, who generally are interested in monetary economics and especially are interested in the interdependences between the financial sector and the real economy. Further information is available on www.rome-net.org. ISSN 1865-7052
econstor www.econstor.eu Der Open-Access-Publikationsserver der ZBW – Leibniz-Informationszentrum Wirtschaft The Open Access Publication Server of the ZBW – Leibniz Information Centre for Economics Nutzungsbedingungen:
"... Die ZBW räumt Ihnen als Nutzerin/Nutzer das unentgeltliche, räumlich unbeschränkte und zeitlich auf die Dauer des Schutzrechts beschränkte einfache Recht ein, das ausgewählte Werk im Rahmen der unter ..."
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Die ZBW räumt Ihnen als Nutzerin/Nutzer das unentgeltliche, räumlich unbeschränkte und zeitlich auf die Dauer des Schutzrechts beschränkte einfache Recht ein, das ausgewählte Werk im Rahmen der unter
