Zero Price Effect - behavioralscience.org

The zero price effect suggests that traditional cost-benefits models cannot account for the psychological effect of getting something for free. A linear model assumes that changes in cost are the same at all price levels and benefits stay the same. As a result, a decrease in price will …

CouponFollow Extension

FAQs about Zero Price Effect - behavioralscience.org Coupon?

Is there a psychological mechanism for the zero price effect?

A possible psychological reason for the zero price effect is the norms that might accompany free products. According to Fiske (1992), McGraw, Tetlock, and Kristel (2003), and McGraw and Tetlock (2005), costly options invoke market exchange norms, whereas free products invoke norms of social exchange. ...

Do people subtract costs from benefits from free (zero price) products?

However, we propose that decisions about free (zero price) products differ, in that people do not simply subtract costs from benefits but instead they perceive the benefits associated with free products as higher. ...

Does zero pricing have a special effect on consumer demand?

If zero pricing has a special effect on consumer demand, then we would expect the quadratic relationship between price and demand to vanish when we exclude the 1082 zero-priced classes from the analysis. We ran the same regression model on the remaining 2420 classes. ...

How does zero pricing affect elaboration?

Thus, the boomerang effect occurs because zero pricing affects not the amount of elaboration but rather the nature of elaboration—specifically, the extent to which consumers consider incidental costs. ...

How strong is the zero price effect?

The zero price effect remains strong as shown in Figure 5, even when the trade-offs involve commensurate products and exchange media ('money'). ...

Is the zero price effect accounted for better by affective evaluations?

Although the zero price effect might be better accounted for by affective evaluations than by social norms or mapping difficulty, the zero price and the price of zero remain a complex and rich domain. All of these forces, including affective evaluations, may come into play in different situations. ...