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Online travel agencies advertise limited availability by indicating room inventories and the number of other travelers. This research investigates the effect of limited availability using supply and demand-based scarcity with price promotion on traveler decisions and cognitive dissonance. Two experimental approaches (between and within subjects) examine the causal effects of scarcity. Demand-based scarcity decreases booking decisions while supply-based scarcity increases booking decisions, especially at a discounted price in a within-subjects design. Scarcity produces cognitive dissonance and intention to undo the decisions. For effective applications, scarcity messages should be transparent, and include non-scarce options for comparison. Multiple scarcity messages minimize undo-intentions.
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Kim et al. (2020) studied this question.
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