Image effects and rational inattention in internet-based selling

Dongwon Lee, Robert Kauffman, Mark Bergen

Research output: Contribution to journalArticlepeer-review

8 Scopus citations

Abstract

The frequency of occurrence of certain price points in Internet-based selling is investigated in order to determine what drives the observed regularities and variations. Theories based on consumer perceptions of price and quality images, and on rational inattention to price-endings are explored by specifying and testing empirical models for price-endings using more than 1.5 million daily observations on multiple product categories sold by 90 Internet-based retailers collected over a two-year period. The results show that a firm's on-line reputation and relative price levels affect the price-endings chosen in different product categories, and that 9-ending prices increase consumer purchases. These findings support an image theory of store quality and price. The use of 9-ending prices varies across Internet selling formats in a way consistent with differences in the rational attentiveness these channels engender in consumers. This research on the role of information technology in price-setting provides insights for marketers who wish to optimize price-setting decisions in the competitive environment of Internet retailing.

Original languageEnglish (US)
Pages (from-to)127-166
Number of pages40
JournalInternational Journal of Electronic Commerce
Volume13
Issue number4
DOIs
StatePublished - Jul 1 2009

Keywords

  • 9-ending prices
  • Image effects
  • Internet-based selling
  • Price points
  • Rational inattention
  • Strategic pricing
  • Technology impact

Fingerprint Dive into the research topics of 'Image effects and rational inattention in internet-based selling'. Together they form a unique fingerprint.

Cite this