Title

Image Effects and Rational Inattention in Internet-Based Selling.

Publication Type

Journal Article

Publication Date

1-2009

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.

Keywords

Image effects, Internet-based selling, 9-ending prices, price points, rational inattention, strategic pricing, technology impact

Discipline

Computer Sciences

Research Areas

Information Systems and Management

Publication

International Journal of Electronic Commerce

Volume

13

Issue

4

First Page

127

Last Page

166

ISSN

1086-4415

Identifier

10.2753/JEC1086-4415130406

Publisher

Taylor & Francis (Routledge): SSH Titles

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