Framing influences willingness to pay but not willingness to accept

Y. Yang, J. Vosgerau, G. Loewenstein

Research output: Contribution to journalArticleScientificpeer-review

Abstract

The authors show, with real and hypothetical payoffs, that consumers are willing to pay substantially less for a risky prospect when it is called a “lottery ticket,” “raffle,” “coin flip,” or “gamble” than when it is labeled a “gift certificate” or “voucher.” Willingness to accept, in contrast, is not affected by these frames. This differential framing effect is the result of an aversion to bad deals, which causes buyers to focus on different aspects than sellers. Buyers' willingness to pay is influenced by the extent to which a risky prospect's frame is associated with risk (Experiment 1) as well as the prospect's lowest (but not highest) possible outcome (Experiment 2). Sellers' willingness to accept, in contrast, is influenced by a prospect's lowest and highest possible outcomes but not by the risk associated with its frame (Experiments 2 and 3). The framing effect on willingness to pay is independent of the objective level of uncertainty (Experiment 4) and can lead to the uncertainty effect. The findings have important implications for research on risk preferences and marketing practice.
Original languageEnglish
Pages (from-to)725-738
JournalJournal of Marketing Research
Volume50
Issue number6
DOIs
Publication statusPublished - 2013

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Willingness-to-pay
Experiment
Willingness to accept
Uncertainty
Framing effects
Seller
Buyers
Lottery
Gambles
Gift
Risk preferences
Marketing practices
Vouchers

Cite this

Yang, Y. ; Vosgerau, J. ; Loewenstein, G. / Framing influences willingness to pay but not willingness to accept. In: Journal of Marketing Research. 2013 ; Vol. 50, No. 6. pp. 725-738.
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Framing influences willingness to pay but not willingness to accept. / Yang, Y.; Vosgerau, J.; Loewenstein, G.

In: Journal of Marketing Research, Vol. 50, No. 6, 2013, p. 725-738.

Research output: Contribution to journalArticleScientificpeer-review

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AB - The authors show, with real and hypothetical payoffs, that consumers are willing to pay substantially less for a risky prospect when it is called a “lottery ticket,” “raffle,” “coin flip,” or “gamble” than when it is labeled a “gift certificate” or “voucher.” Willingness to accept, in contrast, is not affected by these frames. This differential framing effect is the result of an aversion to bad deals, which causes buyers to focus on different aspects than sellers. Buyers' willingness to pay is influenced by the extent to which a risky prospect's frame is associated with risk (Experiment 1) as well as the prospect's lowest (but not highest) possible outcome (Experiment 2). Sellers' willingness to accept, in contrast, is influenced by a prospect's lowest and highest possible outcomes but not by the risk associated with its frame (Experiments 2 and 3). The framing effect on willingness to pay is independent of the objective level of uncertainty (Experiment 4) and can lead to the uncertainty effect. The findings have important implications for research on risk preferences and marketing practice.

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