Psychological Effects of Communicating Temporal Best Prices

When products or services are on discount, it is not always clear to consumers for what price these were sold before. To protect consumers, the European Union’s Omnibus Directive called for more transparency in discounts. In reaction to this, some companies started communicating what we call Temporal Best Prices (TBPs). TBPs indicate what the lowest price was in the last 30 days before the current discounted price. We manipulated whether the TBP was absent (control condition), lower than, equal to, or higher than the current discount for two products. When participants missed out on a better deal (TBPs were lower than the current discount), willingness to buy and perceptions of fairness were lower. Contrary to our expectations, when participants got a particularly good deal the willingness to buy and perceptions of fairness were unaffected. Perceptions of transparency were not affected by the manipulation of TBPs. In conclusion, historical price information in the form of TBPs seems to asymmetrically affect purchase intentions and fairness perceptions.