Anchoring Effects on Consumers' Willingness-to-Pay and Willingness-to-Accept

Abstract

When purchasing products, consumers often need to decide on the highest price they are willing to pay (WTP) and, when selling products, on the lowest price they are willing to accept (WTA). In this research, we contrast the determinants of WTP and WTA judgments and investigate their susceptibility to influence by arbitrary anchors that are unrelated to the product value. Consistent with our analysis, we demonstrate in a series of studies that purchase, but not selling, prices are influenced by arbitrary anchors (e.g., the last two digits of the person's social security number), even when such anchors are rejected as possible purchase/selling prices. Conversely, selling, but not purchase, prices are influenced by arbitrary anchors relating to the perceived market price of the product. The results also indicate that selling prices become sensitive to arbitrary anchors that are considered as possible prices, if the uncertainty about the value of the product to the consumer is made salient. We discuss the implications of these findings with respect to our understanding of the determinants of consumers' willingness-to-pay and willingness-to-accept, value-based pricing, and the anchoring effect.