A Range Theory Account of Price Perception

It is well accepted in the behavioral pricing literature that a consumer's perception of the attractiveness of a market price depends on a comparison of the market price to an internal reference price. The rationale underlying this dynamic has its roots in Adaptation-Level Theory. However, consistent with Range Theory, we postulate that a consumer's assessment of the attractiveness of a market price may also depend on a comparison of the market price to the endpoints of the evoked price range. Four experiments provide evidence that variance in the width of the evoked price range affects price-attractiveness judgments in the absence of any variance in the internal reference price. Of theoretical importance, findings from the present article suggest that pricing theory is in need of augmentation in order to account for this effect. Of managerial relevance, these findings suggest that changes in context can bring about changes in the evoked price range and perceptions of the attractiveness of a market price.