Events

Prof. Yan ZHANG
Associate Professor
NUS Business School
National University of Singapore

ABSTRACT

Marketers often set prices for products with varying numerical attributes by considering the price of a base model. It is crucial to anticipate how consumers will determine their willingness-to-pay (WTP) based on these variations in numerical attributes accordingly to maximize profit. We conduct seven studies to investigate the differential sensitivity of buyers and sellers to product’s numerical information. We find that the gap between buyers’ willingness-to-pay and sellers’ willingness-to-sell (WTS) not only widens but also accelerates as the numerical attribute deviates from the base model. Furthermore, we demonstrate that this differential sensitivity is driven by buyers’ pain of paying. When individuals are evaluating values based on unit price rather than personal feelings, when they are setting prices as agents rather than for themselves, and when they set prices for products separately rather than comparing multiple products, the observed widening and accelerating gap diminishes.