Journal of Business Research 160 (2023) 113769

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Journal of Business Research

journal homepage: www.elsevier.com/locate/jbusres

The influence of self-decided prices on expected quality

Sudipta Mukherjee a, *, Mario Pandelaere b, c
a
College of Business, CSU Sacramento, Sacramento, CA 95819, United States
b
Pamplin College of Business, Virginia Tech, Blacksburg, VA 24061, United States
c
Department of Marketing, Innovation and Organisation, Ghent University, Tweekerkenstraat 2, 9000 Ghent, Belgium

A R T I C L E I N F O A B S T R A C T

Keywords: Across a variety of products and services, this research investigates whether self-decided prices (which the
Pay-what-you-want consumer selects to pay) influence product expectations, similarly to the way a marketer-provided price does.
Product expectations Clearly, product expectations should influence self-decided prices, such that more favorable product expectations
Price presentation order
should increase the consumer’s willingness to pay. However, across eight studies, we find that self-decided prices
Price-quality heuristic
Auctions
also affect product expectations. This suggests that consumers treat their own willingness-to-pay as a signal
Negotiations similar to market prices, and that they update their product expectations based on the price they happen to
decide to pay for a product or service. As a host of research has found that consumers’ willingness-to-pay is often
affected by the context in which they generate it, our research implies that this context subsequently affects
consumer expectations. This effect cannot be explained by self-perception theory or cognitive dissonance theory;
rather, it reflects consumers’ overreliance on the price–quality heuristic, resulting from their tendency to use
marketer-provided prices as a proxy for product quality. We discuss the theoretical contributions and managerial
implications of our findings.

1. Introduction Zhang 2017), or pay-what-you-want (PWYW) (Barone et al., 2017;

Price is a key factor in consumer decision making (Adaval & Monroe,
2002; De Langhe et al., 2014). From a purely economic perspective,
consumers should be willing to buy a product if the value that they
expect from the product is higher than the product price. This idea im­
plies that consumers determine the expected value of a product inde­
pendent of the price. However, ample research has shown that
consumers use price as a cue for product value (Brucks, Zeithaml, &
Naylor, 2000; Parasuraman, Zeithaml, & Berry, 1988; Zeithaml, 1988).
For example, consumers’ expectations about the quality of a wine in­
creases with increasing price (Kardes et al., 2004; Plassmann et al.,
2008), and the expected and actual efficacy of an energy bar decreases
when it is sold at a discounted price (Shiv, Carmon, & Ariely, 2005).
Inferring expected value from price is rational to the extent that prices
reflect the value a market assigns to a product.
In several situations, the price a consumer ends up paying for a
product may not reflect market value though, particularly if consumers
generate or select the product prices on their own, such as in name-your-
own-price (NYOP) (Kim, Kaufman, & Stegemann, 2014; Kim, Natter,
and Spann, 2009), pay-as-you-wish (PAUW) (Chen, Koenigsberg, &
Gneezy et al., 2012; Jung, Perfecto, & Nelson, 2016) pricing schemes,
auctions (Chakravarti et al., 2002; Cheema et al., 2005; Greenleaf, 2004;
Kamins, Dreze, & Folkes, 2004), and negotiations (Schurr & Ozanne,
1985; Srivastava, Chakravarti, & Rapoport, 2000). We use the term
“self-decided prices” to refer to such situations, and these self-decided
prices should reflect the value that consumers expect from the product.
Substantial research demonstrates that self-decided prices may
depend on irrelevant contextual cues, though (Adaval & Wyer, 2011;
Jung, Perfecto, & Nelson, 2016; Nunes & Boatwright, 2004). Despite the
resulting disconnect between the prices that consumers are willing to
pay and the value they expect from a product, we propose that con­
sumers are so prone to using the price–quality heuristic that they apply it
even to infer how much value a product has for them after they have
chosen the price. In other words, the expected value of a product should
determine the self-decided price, but we predict the reverse effect too,
such that consumers infer a product’s value on the basis of the price that
they happen to choose. The arbitrary nature of these self-decided prices,
which often reflect no actual market information, suggests that this
practice lacks any logical basis. Yet across eight studies, we find that
irrelevant contextual factors that determine the price consumers are

* Corresponding author.
E-mail addresses: mukherjee@csus.edu (S. Mukherjee), mpand@vt.edu (M. Pandelaere).

https://doi.org/10.1016/j.jbusres.2023.113769
Received 3 March 2021; Received in revised form 11 February 2023; Accepted 15 February 2023
Available online 1 March 2023
0148-2963/© 2023 Elsevier Inc. All rights reserved.
S. Mukherjee and M. Pandelaere
willing to pay for a product also affect their perceptions of product
value. This implies an overapplication of the price–quality heuristic,
such that irrelevant contextual influences on self-decided prices affect
expected value more among consumers who tend to assume price and
quality are connected, but they disappear when the arbitrary nature of
the contextual influence is made salient. We also present evidence
against prominent alternative accounts presented by self-perception
theory and cognitive dissonance theory.
This research thus contributes to several research streams. First, we
advance existing research on price as a cue that informs product-related
inferences (Cronley et al., 2005; Parasuraman et al., 1988; Zeithaml,
1988) by showing that consumers draw product inferences not just from
marketer-provided prices but also from self-decided prices. The use of
this price–quality heuristic remains surprisingly ubiquitous, even when
it clearly should not be used. This research shows that price-quality
schema is much stronger than earlier expected such that it can influ­
ence quality expectations even when there is no logical basis to do so.
Second, we contribute to research that investigates contextual factors
involving prices (Grewal, Marmorstein, & Sharma, 1996; Herr, 1989;
Huber, Holbrook, & Kahn, 1986; Janiszewski & Lichtenstein, 1999;
Prelec, Wenerfelt, & Zettelmeyer, 1997 ; Rajendran & Tellis, 1994;
Thomas & Morwitz, 2005) and recent advances in price presentation
order research (Cheema, Chakravarti, & Sinha, 2012; DeMoranville,
Klein, & Schoenbacher, 2015; Suk, Lee, & Lichtenstein, 2012) that
highlights differences in the willingness to pay for prices presented in
ascending versus descending orders. We add an important downstream
consequence of price presentation order, namely, its influence on con­
sumers’ product-related inferences. Such price presentation order
research is highly relevant to auctions and negotiations (Cheema et al.,
2012), and the present research contributes to this related stream of
literature. Third, we advance the growing body of research into PWYW
pricing schemes (Chen et al., 2017; Gneezy et al., 2012; Jung et al.,
2016; Kim et al., 2009, 2014), which has primarily focused on factors
that influence consumers’ self-decided prices. By revealing how the self-
decided price affects the inferences that consumers make about a
product that they purchase, our study opens a new avenue for PWYW
pricing literature.
We will next provide an overview of the existing research on (a)
drawing value inferences from price, and (b) contextual influencers of
willingness to pay. We will then develop our hypotheses based on these
two bodies of research, and subsequently discuss the prominent alter­
native mechanisms.
2. Inferring value from price
Consumers use the price information that marketers provide to infer
product value or quality (Adaval & Monroe, 2002; Kardes et al., 2004;
Rao & Monroe, 1989). Multiple studies of this price–quality heuristic
reveal the important role of price in consumers’ efforts to infer product
value. Yet the actual correlation between price and quality is not very
high and is driven partially by an incorrect understanding of heteroge­
neity in price–quality relations (De Langhe et al., 2014). Inferring value
from price also appears to involve automatic processing (Shiv et al.,
2005). Still, this heuristic may have some logical basis. All else being
equal, in a competitive marketplace, a lower quality option will not fetch
the same price as a higher quality option. Thus, people expect that the
prices that marketers assign to their products reflect the value those
marketers would assign to them.
However, in various situations, consumers end up deciding what
price to pay for a product by themselves. In fact, such self-decided prices
are common, as manifested in Pay-what-you-want (PWYW) (Kim et al.,
2009, 2014) or Pay-as-you-wish (PAUW) (Chen et al., 2017) pricing
schemes, auctions (Greenleaf, 2004; Kamins et al., 2004), and price
negotiations (Schurr & Ozanne, 1985; Srivastava et al., 2000). For
example, travel booking websites that offer a NYOP scheme allow con­
sumers to choose the price they will pay for an airline ticket or hotel
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Journal of Business Research 160 (2023) 113769
room, which the website accepts if that price meets minimum re­
quirements. In both English and Dutch price auctions, consumers
consider various prices for the same product and must decide which one
is suitable for them. It seems fair to assume that self-decided prices
reflect the value that consumers predict the offering will grant them.
While we do not dispute that this predicted value serves as a basis for
self-decided prices, substantial research suggests that self-decided prices
also depend on both relevant and irrelevant contextual factors. Our
research question is: Do these contextual influences on willingness to
pay also affect the quality consumers expect from a product or service?
3. Contextual influences on willingness to pay
Contextual factors significantly affect how consumers perceive pre­
sented prices and how much they are willing to pay for products (Adaval
& Monroe, 2002; Grewal et al., 1996; Huber et al., 1986; Janiszewski &
Lichtenstein, 1999; Rajendran & Tellis, 1994; Thomas & Morwitz,
2005). For example, the presence of other prices, to which consumers
can compare the price of a current offering, creates conditions in which a
product may be judged as less expensive if it appears in a high versus low
priced context, so that consumers become more willing to pay the price
(Adaval & Monroe, 2002). Price attractiveness also can be manipulated
by changing the endpoints of an evoked price range (Janiszewski &
Lichtenstein, 1999).
Even anchoring on an irrelevant external price can substantially in­
fluence the price that consumers are willing to pay for a product (Adaval
& Wyer, 2011; Nunes & Boatwright, 2004). For example, consumers are
willing to pay more for a CD if an adjacent stall displays sweatshirts
priced at $80 (vs $10) (Nunes & Boatwright, 2004). Similarly, anchoring
on a higher price for clothing items results in greater willingness to pay
for unrelated, subsequently presented target products (electronics;
Adaval & Wyer, 2011). Subliminal anchoring on irrelevant high prices
affects consumers’ willingness to pay for products that are not related to
the price anchors (Adaval & Wyer, 2011; Mussweiler & Englich, 2005).
Thus, consumers might remain unaware of contextual price anchors and
fail to adjust their willingness to pay accurately.
Anchoring applies not only when consumers see irrelevant prices but
also when they confront a series of relevant prices. In auctions, the
multiple prices might appear in ascending or descending order, and
consumers generally are willing to accept higher prices in the latter
situation (Cheema et al., 2012). They are also more likely to select a
higher priced option in a set when the brands appear in ascending rather
than descending price order (Suk et al., 2012). In salesperson–customer
interactions, a descending (vs ascending) price order results in a greater
likelihood that consumers choose the higher priced options (DeMoran­
ville et al., 2015). In PWYW pricing schemes, the default, suggested, and
maximum prices all exert influences on the self-decided price that
consumers are willing to pay (Jung et al., 2016), similar to the way that
the average price paid by other customers (Gneezy et al., 2012) and the
regular retail price (Kim et al., 2014) can exert effects.
In summary, consumers’ willingness to pay depends on contextual
factors, and we predict that these factors affect self-decided prices in
general. In that case, consumers’ self-decided prices may not reflect their
initially expected value very well. However, we argue that consumers
often fail to recognize how contextual elements guide their decision
making. In addition, they may not realize the difference between
marketer-provided prices and self-decided prices, in terms of the market
information they contain. As a result, consumers may treat their self-
decided prices as valid market prices and infer value and quality from
them.
4. Inferring value and quality from self-decided prices:
Alternative mechanisms
We propose that consumers’ tendency to use marketer-provided
prices to infer product value (Plassmann et al., 2007, 2008; Rao &
S. Mukherjee and M. Pandelaere
Monroe, 1989; Scitovszky, 1944) carries over to the domain of self-
decided prices, such that consumers apply the price–quality heuristic
to their own chosen prices. In a sense, this implies that consumers fail to
distinguish between market prices and self-decided prices in terms of
how valid they are as signals for quality and would base their post-
purchase expectations of quality on either. We do want to make clear
that we do not believe that self-decided prices are entirely arbitrary. In
fact, we surmise that they are based on some initial assessment of ex­
pected quality and value but are also affected by the context in which
self-decided prices are generated. As consumers’ assessment of value
seems to be vague and malleable (Ariely, Loewenstein, & Prelec, 2003,
2006), we propose that they may update their expectations about a
product or service post-purchase and this updated expectation may be
affected by the context through its effect on self-decided prices (see
Fig. 1). While Fig. 1 shows the main factors in the development of the
post-purchase quality expectations, in the present paper, we focus on the
effect of contextual factors (through self-decided prices).
We propose that the effect of self-decided prices on post-purchase
quality expectations are driven by a misguided application of a price-
quality heuristic, but we also consider two alternatives, but related,
mechanisms from the social psychology literature. First, the impact of
self-decided prices on inferred value and quality could stem from
cognitive dissonance (Elliot & Devine, 1994; Festinger, 1962). Cognitive
dissonance theory proposes that people find it psychologically discon­
certing to hold opposite thoughts about the same object and thus seek to
eliminate one of those thoughts, to reestablish a balance. If consumers
have decided on a high price (perhaps due to the influence of an irrel­
evant contextual factor), they cannot also harbor expectations of poor
product value, because such low expectations would be antithetical to
the high self-decided price and cause cognitive dissonance. Thus, in
conditions in which irrelevant contextual factors elicit a higher self-
decided price from consumers, consumers may adjust their expected
product value to minimize their cognitive dissonance.
Second, self-perception theory (Bem, 1967, 1972; Calder & Staw,
1975), which is a rival theory to cognitive dissonance, suggests that
people look to their own behavior to make inferences about themselves
and rationalize their choices. If contextual factors influence consumers’
self-decided price beyond their active awareness (Adaval & Monroe,
2002; Adaval & Wyer, 2011; Mussweiler & Englich, 2005), it is possible
that a higher price, which is merely an artifact of an irrelevant contex­
tual factor, causes consumers to make an inaccurate attribution,
assuming that the price means they value the product highly.
To rule out these alternative explanations, we use a paradigm in
some of our studies to ensure the self-decided prices are entirely deter­
mined by the situation, such that the participants would not experience
any tension and would not attribute their behavior (i.e., self-decided
prices) to their attitudes toward the product. In one study, we also ask
participants to observe someone else’s self-decided prices. These do not
originate with the self, so self-perception and cognitive dissonance
theories do not apply; vicarious cognitive dissonance is unlikely. Finally,
to test our proposed explanation involving an overreliance on the
Fig. 1. Influence of Contextual Factors on Post-purchase Quality Expectations.
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Journal of Business Research 160 (2023) 113769
price–quality heuristic, we examine if the underlying effect is stronger
among consumers with stronger, versus weaker, price–quality schema,
as our theory predicts.
5. Overview of studies
We conducted eight experiments to test our prediction that self-
decided prices affect product-related inferences in the same way as
marketer-provided prices do, due to consumers’ tendency to rely too
much on the price–quality heuristic. In studies 1, 2, and 3, we adopt a
dichotomous choice, contingent valuation experimental procedure, as is
commonly used to elicit people’s willingness to pay (Cameron & James,
1987; Wertenbroch & Skiera, 2002). Within this experimental proced­
ure, we present respondents with a variety of prices in either ascending
or descending price order. Participants’ self-decided prices are higher in
response to the descending price order, and these higher prices also lead
to more favorable product inferences.
Then we apply a different experimental procedure in the remaining
studies to confirm the underlying effect. Specifically, in a fictitious game
show, participants could bid on products. We focused on the last round,
in which participants simply had to bid their remaining budget (which
was non-fungible), and we manipulated whether they had much or a
little left. We find that the bid amount, even though completely unre­
lated to the inherent product value, affects their product quality ex­
pectations. The arbitrary nature of these bids renders cognitive
dissonance and self-perception implausible. Study 5 specifically rules
out alternative explanations provided by self-perception theory and
cognitive dissonance theory by showing that participants make similar
product inferences when they decide on the bid amount versus when
someone else does. Study 6 shows that the arbitrary bids affect product
inferences more for consumers who routinely believe that price signals
quality. Study 7 confirms that making the arbitrary nature of the bids
salient eliminates these effects. Finally, study 8 shows the effect to hold
true for choice satisfaction, a downstream variable.
6. Study 1
With study 1 we test the idea that an undue influence on self-decided
prices affects subsequent judgments of product quality. To influence
self-decided prices, we asked participants to indicate, for a range of
prices, if they would consider buying a product at that price. The prices
appeared from low to high (ascending price order) or from high to low
(descending price order). In line with anchoring processes (Ariely &
Simonson, 2003; Kamins et al., 2004), we expect a higher willingness to
pay in the latter condition, which in turn should prompt higher judg­
ments of product quality.
In addition, we manipulate the step size ($10 vs $20) in which prices
increase or decrease. This is because the ascending vs descending price
order manipulation not only manipulates the self-decided price but also
the starting price - the initial price being higher in the descending (vs
ascending) price order. Perhaps the starting prices affect quality
S. Mukherjee and M. Pandelaere
inferences, which would imply a different explanation. If consumers
regard the starting prices as marketer-provided prices, their observed
application of a price–quality heuristic would merely replicate prior
research. To rule out this alternative interpretation, we manipulate the
step sizes in addition to the price order. We speculate that self-decided
prices may differ more between the two price presentation order con­
ditions if the differences between their consecutive price levels is small
($10) rather than large ($20). If participants infer product quality from
the initial price, this price step size should not moderate the effect of the
price presentation order on product inferences. If instead they infer
product quality from the self-decided price, it should.
6.1. Design and procedure
We adopt a 2 (price presentation order: ascending vs descending) × 2
(price step size: $10 vs $20) between-subject factorial design. Two
hundred thirty participants (49 % female; Mage = 41.04) from online
consumer panel (Amazon MTurk) took part in this study in exchange for
token compensation. The price presentation order (ascending vs
descending) was manipulated by sequentially presenting respondents
with a series of prices ranging from $10 to $110 ($110 to $10) in the
ascending (descending) price order condition. Price step size ($10 vs
$20) was manipulated by varying the prices in the self-decided price
elicitation procedure, using either steps of $10 or $20. At each presented
price, respondents were asked to indicate whether they would be willing
to buy the focal product at the price shown on screen. This study was
programmed to not show the price levels beyond the respondents’
maximum willingness to pay. That is, in the ascending (descending)
price condition, the final price shown to respondents was the price at
which they said no (yes) to the product.
The product used in this study is a general, everyday consumer
product (room heater plus cooler) (Appendix A). Further, participants
were provided with detailed information about the product. The
dependent measure in this study was expected product quality. After
responding to the self-decided price elicitation procedure, respondents
completed four Likert scale items (α = 0.93) to gauge their expected
product quality (“What is the most likely durability of this heater/
cooler?” (scale from 1 = “Very Poor Durability” to 7 = “Very Good
Durability”), “What is the most likely quality of the heating function of
this heater/cooler?”, “What is the most likely quality of the cooling
function of this heater/cooler?”, “What is the most likely overall quality
of this heater/cooler?” (scales from 1 = “Very Poor Quality” to 7 = “Very
Good Quality”).
Finally, because a lot of judgments are affected by a misattribution of
the ease of processing (i.e., fluency; Alter and Oppenheimer, 2009), we
measured perceived fluency of evaluating the product quality with two
Likert scale items (α = 0.65) to gauge their expected product quality
(“How easy was it to evaluate the quality of this heater/cooler?” (scale
from 1 = “Very Difficult” to 7 = “Very Easy”), “How effortless was it to
evaluate the quality of this heater/cooler?” (scale from 1 = “Very
Effortful” to 7 = “Very Effortless”). We did not expect fluency to differ
between the two price order conditions but wanted to rule out this
possibility.
The details of the study procedures for this study and all other
remaining studies can be found in the web appendix.
6.2. Results and discussion
A 2-way between-subjects ANOVA tested the main effects of price
presentation order, price steps, and their interaction on self-decided
prices. The main effect of the price presentation order on self-decided
prices was significant (Mascending = $50.62, SD = 38.37; Mdescending =
$86.32, SD = 38.65; F(1, 226) = 56.53; p <.001; Cohen’s d = 0.93), but
the main effect of the price steps ($10 vs $20) was not (Mpricestep_$10 =
$71.43, SD = 40.87; Mpricestep_$20 = $66.56, SD = 43.67; F(1, 226) =
1.24; p =.27). We found a significant interaction between price
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Journal of Business Research 160 (2023) 113769
presentation order and price steps (F(1, 226) = 12.69, p <.001). As
expected, planned contrasts revealed that the influence of price pre­
sentation order on the self-decided prices was stronger when price step
size is $10 (Mascending = $44.15, SD = 35.33; Mdescending = $99.23, SD =
23.92; F(1, 226) = 56.52; p <.001, d = 1.47) than when the price step
size is $20 (Mascending = $56.33, SD = 40.29; Mdescending = $76.01, SD =
44.82; F(1, 226) = 8.57; p =.004, d = 0.52).
If self-decided prices inform product inferences (rather than the
starting prices consumers encounter), we should also observe an inter­
action for expected product quality, and the results confirm this pre­
diction. We indeed found a significant interaction between price
presentation order and price step sizes for expected product quality (F(1,
226) = 4.54, p =.034). Planned contrasts revealed that ascending price
presentation order results in lower expected product quality when the
price step size is $10 (Mascending = 4.98, SD = 1.49; Mdescending = 5.67, SD
= 0.84; F(1, 226) = 7.06; p =.008; d = 0.52) but not when it is $20
(Mascending = 4.94, SD = 1.29; Mdescending = 4.88, SD = 1.54; F(1, 226) =
0.06; p =.80, d = 0.045) (see Fig. 2). We also ran a moderated mediation
model (PROCESS model 7; 10,000 bootstrap samples; Preacher and
Hayes 2008) to test whether step size moderates the indirect effect of
price presentation order on expected quality through self-decided prices.
The index of moderated mediation is significant (Index of moderated
mediation: -0.28, SE: 0.09, 10,000 bootstrap 95 % C.I. (-0.47, -0.12)).
The indirect effect of price presentation order on expected quality
through self-decided prices was significant when step size is $10 (10,000
bootstrap 95 % C.I. (-0.62, -0.27)), but not when it is $20 (10,000
bootstrap 95 % C.I. (-0.29, 0.04)). Importantly, the direct effect of price
presentation order on expected quality was not significant (b = 0.14, t
(2 2 7) = 1.62, p =.11), and was even in the opposite direction of the
indirect effects.1
Finally, while perceived fluency did correlate with expected quality
(r = 0.301, p <.001), a 2-way between-subjects ANOVA on perceived
fluency found neither a main effect of the price presentation order (F(1,
226) = 0.007; p =.93) or step size (F(1, 226) = 0.002; p =.97), nor an
interaction between these two factors (F(1, 226) = 0.004; p =.95). A 2-
way between-subjects ANCOVA on expected quality, controlling for
fluency, continues to reveal a significant interaction between price
presentation order and price step sizes for expected product quality (F(1,
225) = 4.89, p =.028).
This study shows that the order in which participants confront prices
for an object not only affects their willingness to pay for it, but also
affects expected product quality. This indicates that participants’ quality
assessments are, in part, affected by how much they end up deciding to
pay. We do not doubt that participants also made an initial quality
assessment that guided their willingness to pay decisions, but because
participants were randomly assigned to the conditions, the average
initial assessment should be (about) the same in all conditions. Any
difference in reported expected quality judgements thus suggests that
these are partly based on self-decided prices, and thus that they are
amenable to contextual influences just as self-decided prices are.
We propose that this effect occurs because people overapply a price-
quality heuristic to the prices they happen to pay, but there are several
alternative mechanisms to consider. The present study rules out two of
1
An anonymous reviewer raised the possibility that price presentation order
would directly affect expected quality through an anchoring-and-adjustment
heuristic, but with stronger rates of adjustment in the higher step size condi­
tions ($20), rather than indirectly through self-decided prices. This would imply
that, when we hold step size constant, price presentation order should affect
reported quality expectations directly. To test this possibility, we ran separate
mediation tests for the $10 and the $20 step size conditions. For neither con­
dition did we observe a direct effect of price presentation order on expected
quality, controlling for self-decided prices ($10 condition: p =.58; $20 condi­
tion: p =.14). So, any effect we observe on expected quality seems to go through
self-decided prices.
S. Mukherjee and M. Pandelaere
Study 1: Influence of interaction between price order and price step on expected quality
Fig. 2. Study 1: Influence of interaction between price order and price step on expected quality.
those mechanisms. First, manipulating price order implies that partici­
pants were exposed to different starting prices. It is therefore possible
that participants viewed these starting prices as indicative of product
quality and derived their expectations of the starting prices rather than
their self-decided prices. To rule this out, we also manipulated the dif­
ference between consecutive prices that the participants saw (i.e., step
size). We had surmised that self-decided prices would be affected not
only by the order or prices, but also by step size. This was indeed the
case. In fact, price presentation order affected self-decided prices less
when step sizes were large (Cohen’s d = 0.52) rather than small (d =
1.47). In line with our theorizing, and ruling out an explanation based
on starting prices, price presentation order also affected expected
quality less when step sizes were large (d = 0.04) rather than small (d =
0.52). One may wonder why the self-decided prices were different in the
two large step size conditions, but expected quality was not. We believe
that self-decided prices may serve to update a prior expected quality
expectation, rather than entirely determine it. If so, the reported quality
expectation would be a linear combination of the initial expectation and
self-decided prices. This would cause the reported quality expectation to
differ less than one would expect based on the inspection of the self-
decided prices alone. In line with this idea, we note that the correla­
tion between self-decided prices and expected quality is medium sized (r
= 0.44, p <.001).
Finally, many judgments are affected by the ease of processing (Alter
and Oppenheimer, 2009), and so one may wonder if ease of processing
created differences between the conditions, too. While we did find in
line with previous research that fluency was positively correlated with
expected quality, we found no evidence that fluency was different in the
different conditions. In addition, controlling for fluency did not change
our basic results. So, we consider it implausible that our effects can be
explained by differential fluency.
7. Study 2
Study 1 shows that contextual factors (viz. price presentation order)
affect expected quality. We found that people partly base their expected
quality assessments on the price they happen to pay. We do believe that
the effect of self-decided price on expected quality is an update of some
initial assessment of expected quality. This begs the question, what
happens when consumers confront a rather strong cue of product quality
before deciding on a price. Would context still affect self-decided prices?
In addition, would context still affect reported quality? To address these
questions, in Study 2, we manipulate the prior quality expectations of
products and show that the influence of self-decided prices on perceived
quality depends on the strength of their prior product quality
expectations.
We also made two other changes, relative to the previous study. First,
to increase generalizability, we changed the product (wine). Second, in
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Journal of Business Research 160 (2023) 113769
Study 1, price presentation order affected not only the self-decided
price, but arguably also the price range participants were exposed to.
To wit, in the downward direction, participants saw prices from the high
starting price to their self-decided price. In the upward direction, they
saw prices from the low starting price to the price just above their self-
decided price (which was the first price they then rejected). To rule out
that this differential price range affected expected quality, in the present
study, we provide a price range for the focal product along with other
relevant details about the product. Given that the price range informa­
tion is the same across the ascending and descending price order con­
ditions, any systematic differences between the conditions in terms of
expected quality would then be solely due to the difference in self-
decided prices, and not difference in expected price ranges.
7.1. Design and procedure
We used a 3 (price presentation order: ascending vs descending vs
baseline) × 2 (quality cue: present vs absent) between-subject factorial
design. Three hundred and eight MTurk panelists (56 % female; Mage =
36.78) took part in this study in exchange for token compensation. In the
ascending and the descending price order conditions, the price presen­
tation order was manipulated as in the previous study. The prices varied
from $10 to $60, in steps of $5. In addition, we included a baseline
condition in which the price order was not manipulated. In the baseline
condition, the perceived quality elicitation questions were presented
immediately after the product description. The product used for this
study was a bottle of wine (see details in Appendix B). We provided
detailed description of the wine bottle, including wine variety and
typical price range ($30 to $45); we restricted the price range because it
is unreasonable to expect that the same wine would be sold for anything
between $10 and $60. Using a price range that is smaller than the range
of prices that the participants have to respond to creates a conservative
test of our theory as it limits the prices that consumers would accept. In
the quality cue present condition, respondents were shown that the
bottle of wine had won two awards. This award information was absent
in the quality cue absent condition. A pre-test indicated that the pres­
ence of the award information results in significantly higher perceived
quality (Maward_present = 4.81, SD = 1.07; Maward_absent = 4.11, SD = 1.13; F
(1, 84) = 8.78; p =.004; d = 0.64).
Respondents completed five Likert scale items (α = 0.95) to gauge
their expectations regarding product quality. These items were: 1) “How
good would this wine taste? (scale from 1= “Very Bad” to 7 = “Very
Good”); 2) “What is the most likely quality of the grape variety that has
been used in this wine?”, 3) “What is the most likely quality of this brand
of wine?”, 4) “What is the most likely overall quality of this bottle of
wine?” (scales from 1 = “Very Poor Quality” to 7 = “Very Good Qual­
ity”); and 5) “How prestigious do you think are the awards that have
been given to this wine?” (Quality cue present condition), or “Imagine
S. Mukherjee and M. Pandelaere
that this bottle of wine has been given some awards. How prestigious do
you think are the awards that have been given to this wine?” (Quality
cue absent condition) (scales from 1 = “Not Prestigious at All” to 7 =
“Very Prestigious”).
7.2. Results and discussion
A 2-way between-subjects ANOVA tested the main effects of price
presentation order, prior quality expectations, and their interaction on
self-decided prices. The main effect of the price presentation order (price
order: ascending vs descending) on self-decided prices again was sig­
nificant (Mascending = $19.95, SD = 13.37; Mdescending = $35.63, SD =
14.55; F(1, 202) = 64.04; p <.001; d = 1.12), but the main effect of the
prior quality expectations (quality cue: present vs absent) was not
(Mquality cue: present = $28.81, SD = 14.72; Mquality cue: absent = $26.73, SD =
17.24; F(1, 202) = 0.002; p =.965). The interaction between price
presentation order and prior quality expectation was also not significant
(F(1, 202) = 1.69, p =.20).
When testing the results for expected quality, we found that the main
effects of price order (F(2, 302) = 2.97; p =.05) and quality cue (F(1,
302) = 7.58; p =.006) were significant. Their interaction was also sig­
nificant (F(2, 302) = 3.94; p =.020). Specifically, while the descending
price order (Mdescending = 5.38, SD = 0.95) resulted in significantly higher
expected quality than the ascending order (Mascending = 4.71, SD = 1.28)
and the baseline condition (Mbaseline = 4.86, SD = 1.06; F(2, 302) = 5.75;
p =.004) in the quality cue absent, there was no difference between the
ascending order (Mascending = 5.22, SD = 0.94), the descending order
(Mdescending = 5.24, SD = 0.99), and the baseline condition when the
quality cue was present (Mbaseline = 5.46, SD = 0.81; F(2, 302) = 0.82; p
=.44). Further, while the presence of a quality cue resulted in signifi­
cantly higher expected quality in the case of the baseline (F(1, 302) =
8.69, p =.003) and the ascending order (F(1, 302) = 6.36, p =.012)
condition, this was not the case for the descending order (F(1, 302) =
0.48, p =.49) condition (see Fig. 3).
We also ran a moderated mediation model (PROCESS model 7;
10,000 bootstrap samples; Preacher & Hayes, 2008) to test whether
quality cue moderates the indirect effect of price presentation order on
expected quality through self-decided prices. As we did not elicit any
willingness to pay in the baseline condition, we only included the
ascending and descending price order conditions. The index of moder­
ated mediation is significant (Index of moderated mediation: -0.14, SE:
0.06, 10,000 bootstrap 95 % C.I. (-0.21, -0.04)). While the indirect effect
of price presentation order on expected quality through self-decided
prices is significant when quality cue is absent (10,000 bootstrap 95 %
C.I. (-0.41, -0.16)), but not when it is present (10,000 bootstrap 95 % C.I.
(-0.28, 0.01)).
This study examines what happens when people have very strong
Study 2: influence of interaction price order and quality cue on perceived quality
Fig. 3. Study 2: influence of interaction price order and quality cue on perceived quality.
6
Journal of Business Research 160 (2023) 113769
prior quality expectations. We hypothesized that consumers create an
initial quality expectation, which they update based on their self-
decided prices to form a final product quality expectation (see Fig. 1).
Possibly, consumers are less likely to update their quality expectation if
they have a firm expectation about the quality of a product. In the
present study, we provide participants with a strong cue of quality – the
fact that the wine won two awards. We found that in this situation,
expected quality is uniformly high, and does not depend on the context
(i.e., price presentation order). Interestingly enough, though, in spite of
this strong product quality expectation, participants’ self-decided prices
continued to be affected by price presentation order. Potentially, as long
as contextual factors affect self-decided prices beyond the effect of any
quality information or cues that are being provided, these contextual
factors might also affect post-purchase quality expectations, even if this
was not the case in the present study. Alternatively, if self-decided prices
are affected by a context, but quality expectations not, this may cause
consumers to feel post-purchase regret.
8. Study 3
This study shows the robustness of the influence of self-decided
prices on product inferences by introducing a real consequence to the
experimental scenario. Specifically, we introduced the possibility that
respondents could actually buy the focal product used in the experiment
by paying their self-decided price.
8.1. Design and procedure
We used a single factor (order: ascending vs descending vs baseline)
between-subject factorial design. One hundred and eighty-four MTurk
panelists (55.97 % female; Mage = 35.89) took part in this study in ex­
change for token compensation. At the very outset, respondents were
told that the purpose of the study was to determine their willingness-to-
pay for a pair of bluetooth headphones (see details in Appendix C). They
were then told that they would have the opportunity to enter a lottery in
which the winner would have the opportunity to buy the pair of blue­
tooth headphones at the price they would decide while taking part in the
study. This was done to ensure that respondents considered their re­
sponses as being consequential and that the study provided a compatible
incentive.
In the ascending and descending price order conditions, the price
presentation order was manipulated as in the previous two studies. The
prices varied from $5 to $60, in steps of $5. In addition, we included a
baseline condition in which the price order was not manipulated. In the
baseline condition, respondents were asked to indicate an amount, be­
tween $5 and $60, that they would be willing to pay for the focal
product used in the study. The product used for this study was a pair of
S. Mukherjee and M. Pandelaere
bluetooth headphones (see details in Appendix C). We provided detailed
description of the pair of bluetooth headphones, including brand name,
average ratings and reviews, and key product features.
Respondents completed four Likert scale items (α = 0.98) to gauge
their expectations regarding product quality. These items were: 1)
“What would be the most likely quality of this pair of bluetooth head­
phones?”, 2) “What is the most likely quality of the technology that has
been used in this pair of bluetooth headphones?”, 3) “What is the most
likely quality of the brand of this pair of bluetooth headphones”, and 4)
“What is the most likely overall quality of this pair of bluetooth head­
phones?” (scales from 1 = “Very Poor Quality” to 7 = “Very Good
Quality”).
Finally, respondents were asked to provide their email address in
case they wanted to be entered into a lottery whose winner would have
the opportunity to buy the bluetooth headphones pair at the self-decided
price.
8.2. Results and discussion
A one-way ANOVA revealed a significant main effect of order
(ascending vs descending vs baseline) on self-decided prices (Mascending =
$24.76, SD = 16.74; Mdescending = $35.75, SD = 18.41; Mbaseline = $29.10,
SD = 16.88; F (2, 181) = 6.24, p =.002) (Fig. 4) and expected quality
(Mascending = 4.44, SD = 1.98; Mdescending = 5.28, SD = 1.11; Mbaseline =
4.82, SD = 1.29; F (2, 181) = 4.69, p =.01) (Fig. 4). Planned contrasts
revealed that the self-decided price and expected quality is higher in the
descending order condition than in the ascending order condition (self-
decided price: p =.001; d = 0.62; expected quality: p =.004; d = 0.52)
and the baseline condition (self-decided price: p =.041; d = 0.38; ex­
pected quality: p =.042; d = 0.38). We found no difference between the
ascending order condition and the baseline condition for either self-
decided price (p =.15) or expected quality (p =.199).
Additionally, a chi-square analysis revealed that there was a signif­
icant main effect of order (ascending vs descending vs baseline) on the
likelihood of providing one’s email id (Mascending = 30.2 %; Mdescending =
58.3 %; Mbaseline = 39.3 %; χ 2 (2, 181) = 10.34, p =.006) (Fig. 4). The
likelihood of providing one’s email id was significantly greater in the
descending order condition than in the ascending order condition (p
=.002) and baseline condition (p =.037); the latter two conditions did
not differ (p =.28).
We also conducted two mediation tests. First, we found that the in­
direct effect of price presentation order on expected quality through self-
decided prices was significant (ascending vs descending conditions:
10,000 bootstrap samples 95 % C.I. (-0.36, -0.07); baseline vs
descending conditions: 10,000 bootstrap samples 95 % C.I. (-0.43,
-0.009)). In addition, we found that the indirect effect of price presen­
tation order on likelihood to provide one’s email id through self-decided
prices was significant (ascending vs descending conditions: 10,000
bootstrap samples 95 % C.I. (-0.21, -0.06); baseline vs descending
Fig. 4. Study 3: Influence of price order on self-decided price, expected quality, and likelihood to provide email ID.
7
Journal of Business Research 160 (2023) 113769
conditions: 10,000 bootstrap samples 95 % C.I. (-0.20, -0.07)).
This study involves a real consequence and provides detailed product
description – thus increasing the external validity of the study. As
before, we find that price presentation order affects both self-decided
prices and expected quality. In addition, we also offered participants
the opportunity to leave their email to be contacted in case they won the
lottery. Since an email address arguably serves to some extent as a
personal identifier, people are reluctant to provide this information
(Phelps, Nowak, & Ferrell, 2000). From the perspective of our partici­
pants, then, leaving their email address is a consequential decision. The
more value they see in the product they can gain from leaving their
email, the more likely they should be to leave it. Our results show that
our participants were indeed more likely to leave their email in the
descending order condition, which happens to be the condition where
self-decided prices were also highest. In addition, a mediation test shows
that the effect of price presentation order on the likelihood to leave one’s
email address is significantly mediated by self-decided prices. This at­
tests to the robustness and external validity of our findings.
To summarize, the first three studies use a paradigm in which we
manipulate the price presentation order to manipulate self-decided
prices and find that it also affects expected quality. This paradigm is
relevant for comparing the impact of different auction schemes or
different ways a salesperson can present a suite of options on expected
quality. In our next five studies, we adopt a different experimental
procedure to test the influence of self-decided prices on product-related
inferences, for two main reasons. First, with a different experimental
procedure, we can confirm the robustness of the proposed effect. Sec­
ond, whereas studies 1, 2, and 3 subtly manipulate participants’ self-
decided prices, in the remaining studies we turn to a paradigm in
which they are virtually constrained by the situation, which renders
cognitive dissonance and self-perception explanations less plausible.
9. Study 4
The study design involved a fictitious game show. Participants had to
imagine being contestants in a game show with multiple rounds, each of
which entailed a two-step procedure. They first had to bid for the op­
portunity to spin a wheel, marked by various products. If their bid
exceeded a randomly determined amount, they proceeded to the second
step, in which they got to spin the product wheel and received whatever
product the wheel signaled. If their bid fell short, they proceeded to the
next round. Irrespective of whether they won or lost the bid, the bid
amount was subtracted from their allotted budget. The experimental
procedure focused on the last round. Participants read that they had
either a lot or a little money left and that they could not keep any of the
money after the last round. Logically then, they should bid all of their
budget.
With this paradigm, we elicit an arbitrary, self-decided price that is
totally dictated by the situation. Participants thus should not consider
S. Mukherjee and M. Pandelaere
their bidding behavior diagnostic of their intrinsic product valuation
(self-perception theory), nor should they feel dissonance if they ascribe
low value to the product when the amount bid is high (cognitive
dissonance theory). Any systematic differences across experimental
conditions (low vs high bid amounts), in terms of product inferences,
thus imply a mindless overreliance on the price–quality schema.
9.1. Design and procedure
One hundred thirty undergraduate students (68 % female; Mage =
20.56) took part in this study in exchange for course credit. In the two-
step, interactive, online game simulation, respondents read that they
were taking part in a game called “Wheel of Fortune.” In the first step,
they had a certain amount of game money to use and were required to
bid a certain amount to play. Then in the second step, they saw the
virtual wheel (Appendix D), which contained a list of products, and had
to spin that wheel.
Thus, in the first step, respondents blindly bid an amount that they
wished to play in that round, even without seeing the wheel of products,
let alone knowing which product they could win. To manipulate the
amount bid, we asked respondents to imagine that they were in the last
stage of the game and were left with either $20 (low remaining budget
condition) or $100 (high remaining budget condition) in game money,
which was non-transferrable to cash or credit, so any amount not bid
would be useless. After respondents spun the wheel, they learned that
they had won a pair of sunglasses, and they indicated their expectations
of product quality on two seven-point Likert-scale items (α = 0.92)
(“What do you think would be the quality of the pair of sunglasses?” and
“What is the most likely quality of the pair of sunglasses?”).
9.2. Results
As expected, the bid amounts are significantly higher when the
remaining budget is large (Mlarge_budget = $89.85, SD = 23.22) rather than
small (Msmall_budget = $18.69, SD = 4.05; F(1, 128) = 592.45, p <.001, d
= 4.27). The expected product quality of the sunglasses also is higher
when the remaining budget is large (Mlarge_budget = 4.60, SD = 1.55)
rather than small (Msmall_budget = 3.86, SD = 1.49; F(1, 128) = 7.68, p
=.006, d = 0.49). Because the bid amounts are almost entirely governed
by the remaining budget, we refrain from testing any mediation model
to test the indirect effect of remaining budget on expected quality, via
self-decided prices, in this study and the subsequent ones. Not only is
there little to gain conceptually from these models, they are also plagued
by multicollinearity considering the strong relation between remaining
budget and self-decided prices.
Self-decided prices (operationalized as a bid amount) influence
consumers’ product-related inferences. We find that the expected
quality of a pair of sunglasses increases when the amount bid is higher.
Yet most respondents bid this amount blindly, and the self-decided
prices were entirely constrained by the situation. Thus, participants
should not have anticipated that their self-decided prices provided any
information about the product. They also should not sense any cognitive
tension when indicating product value or think that prices reflect their
attitudes. Therefore, the potential alternative mechanisms, derived from
self-perception and cognitive dissonance theories, appear very
implausible.
Further, the paradigm used in this study offers us a more conserva­
tive test for the effect, and our proposed mechanism involving price-
quality schema, as compared to traditional “name-your-own-price”
method which is very similar to what consumers would experience on
Priceline.com. While using Priceline’s “Name-Your-Own-Price” (NYOP)
tool, consumers would bid an amount without knowing which specific
flight or hotel they would win. Our paradigm is not unlike this but differs
in two major ways. First, while consumers are explicitly aware that the
amount they bid is the price that they are willing to pay for a flight or a
hotel while using Priceline’s NYOP tool, our paradigm has respondents
8
Journal of Business Research 160 (2023) 113769
bid an amount which they clearly know is not the product price. This
should weaken the effect, as compared to a NYOP paradigm. Second,
under our paradigm, respondents bid an amount without even knowing
which category of product they could win – thus further weakening the
justification of using a price-quality schema heuristic.
10. Study 5
To rule out the self-perception and cognitive dissonance theor­
y–based accounts even more definitively, in study 5 we ask participants
to imagine either being a game show contestant (actor perspective) or
watching another game show contestant (observer perspective). In the
latter condition, participants do not participate in the game but rather
observe a distinct other participate in the game. From an observer
perspective, self-perception and cognitive dissonance are irrelevant, but
the suggested bid amount might continue to affect product inferences if
consumers mindlessly apply the price–quality heuristic.
10.1. Design and procedure
One hundred and eighty-five undergraduate students (64 % female;
Mage = 20.83) took part in this study in exchange for course credit. It
features the Wheel of Fortune game from study 4. In contrast to Study 4,
though, study 5 uses a 2 (remaining budget: small vs large) × 2
(perspective: actor vs observer) between-subject factorial design.
In the observer perspective condition, respondents were told that
they were only watching the game and that the player had decided to bid
$20 ($100) in the small (large) remaining budget condition, in other
words, all of their remaining budget. In the actor perspective condition,
respondents were told that they were participating in the last stage of the
game and were left with either $20 (small remaining budget condition)
or $100 (large remaining budget condition). Participants read that they
would be eligible to play only if their bid was larger than a randomly
generated number between 0 and 200. Thus, they should have a moti­
vation to bid the largest amount possible. The dependent measures are
identical to those from study 4.
10.2. Results and discussion
As expected, in the actor perspective, the bid amount in the small
budget condition (Msmall_budget = $17.91, SD = 4.70) is lower than that in
the large budget condition (Mlarge_budget = $89.04, SD = 25.27; F(1, 89) =
344.90, p <.001, d = 3.91). A 2-way between-subjects ANOVA reveals
that the main effect of bid amount on expected product quality was
significant (Msmall_budget = 3.87, SD = 1.19; Mlarge_budget = 4.56, SD = 1.53;
F(1, 182) = 11.9, p =.001, d = 0.50), whereas the main effect of
perspective (F(1, 182) = 0.02, p =.90) and the interaction between
remaining budget and perspective (F(1, 182) = 0.59, p =.44) were not.
This study conclusively rules out self-perception and cognitive
dissonance as underlying reasons to explain why self-decided prices
affect product-related inferences. It does not confirm our proposed
mechanism though. This confirmation is the aim of the next three
studies.
11. Study 6
To test if the influence of self-decided prices on product-related in­
ferences is due to an overreliance on the price–quality heuristic, we
examine if individual differences in price–quality schema moderate the
effect. We predict that self-decided prices lead to stronger product in­
ferences among people who more strongly believe that price and quality
are related.
11.1. Design and procedure
One hundred fourteen participants (50 % female; Mage = 40.50) from
S. Mukherjee and M. Pandelaere
online consumer panel (Amazon MTurk) took part in this study in ex­
change for token compensation. They were randomly assigned to one of
two conditions (remaining budget: $20 vs $100; all with the actor
perspective). After completing questions regarding their bid amount and
expected product quality, participants filled out a four-item scale to
measure their price–quality schema (α = 0.83; Lichtenstein & Burton,
1989). These scale items are in Appendix E.
11.2. Results and discussion
The bid amount in the small budget condition (Msmall_budget = $17.70,
SD = 4.19) again is lower than that in the large budget condition
(Mlarge_budget = $86.90, SD = 21.05; F(1, 112) = 592.68, p <.001, d =
4.56). As predicted, the expected product quality is higher in the large
budget condition (Mlarge_budget = 5.22, SD = 1.04) compared with the
small budget condition (Msmall_budget = 4.19, SD = 2.09; F(1, 112) =
10.96, p =.001, d = 0.62).
To test for moderation by the price–quality schema, we estimated a
general linear model that contained the remaining budget (as a dummy),
price–quality schema, and their interaction. We find a significant
interaction (F(1, 110) = 7.31, p =.008). A Johnson-Neyman significance
analysis helps unpack the significant interaction between the pri­
ce–quality schema and remaining budget without a reminder interven­
tion. The effect of the remaining budget on expected quality is
significant only among people associated with price–quality schema
values of 4.93 or higher (72.81 % of the participants; see Fig. 5).
This study provides evidence that the influence of self-decided prices
on product inferences is due to consumers’ tendency to use a pri­
ce–quality heuristic, which they even apply to their own self-decided
prices to update their quality expectations.
12. Study 7
If consumers rely too much on the price–quality heuristic when
considering self-decided prices, they presumably do so rather mind­
lessly. In that case, making consumers mindful of the arbitrary nature of
their self-decided prices should reduce their tendency to draw on those
prices to infer value. With study 7, we test this prediction and also seek
to replicate the moderation by price–quality schema that we found in
study 6. Further, this study further shows that over-application of price-
quality heuristic is the underlying mechanism for the effect.
12.1. Design and procedure
Two hundred thirty-nine participants (64 % female; Mage = 38.13)
Fig. 5. Study 6: Johnson-Neyman region.
9
Journal of Business Research 160 (2023) 113769
from online consumer panel (Amazon MTurk) took part in this study in
exchange for token compensation. They played the Wheel of Fortune
game, with a 2 (remaining budget: small vs large) × 2 (reminder
intervention: absent vs present) between-subjects design. For the
experimental conditions with a reminder intervention, we asked re­
spondents to acknowledge that the bid amount was random in nature
and not connected in any way to the asking price of the product, before
they responded to the expected product quality measures. For the
experimental conditions without a reminder intervention, respondents
only completed the expected quality items. All respondents then filled
out the price–quality schema scale from study 6.
12.2. Results and discussion
Again, the overall bid amount is significantly higher in the large
budget condition (Mlarge_budget = $82.68, SD = 27.48) than in the small
budget condition (Msmall_budget = $17.98, SD = 4.03; F(1, 237) = 640.58,
p <.001, d = 3.29). A 2-way ANOVA with remaining budget and
reminder intervention as fixed factors and expected quality as the
dependent variable indicates significant main effects of remaining
budget (Mlarge_budget = 4.90, SD = 1.32; Msmall_budget = 4.38, SD = 1.49; F
(1, 235) = 7.94, p =.005, d = 0.37) and reminder intervention (Min­
tervention_present = 4.44, SD = 1.44; Mintervention_absent = 4.84, SD = 1.39; F(1,
235) = 4.20, p =.04, d = 0.28). In addition, we find a significant
interaction between remaining budget and reminder intervention (F(1,
235) = 9.44, p =.002) (Fig. 6). Expected product quality is significantly
higher in the large budget condition (Mlarge_budget = 5.00, SD = 1.21)
compared with the small budget condition (Msmall_budget = 3.95, SD =
1.46; F(1, 235) = 17.16, p <.001, d = 0.78) if the reminder intervention
is absent, but it is not when the reminder intervention appears (Mlarge_­
budget = 4.82, SD = 1.41; Msmall_budget = 4.86, SD = 1.38; F(1, 235) = 0.03,
p =.86).
In a general linear model with two fixed factors (remaining budget
and reminder intervention) and a continuous factor (price-quality
schema), we identify a significant three-way interaction (F(1, 231) =
4.14, p =.04). In support of the robustness of the study 6 findings, we
find a significant two-way interaction (F(1, 114) = 7.63, p =.007) be­
tween price–quality schema and remaining budget when the reminder
intervention is absent, but the interaction is not significant (F(1, 117) =
0.001, p =.97) when the reminder intervention is present. A Johnson-
Neyman significance analysis helps unpack the significant two-way
interaction between the price–quality schema and remaining budget
without a reminder intervention. The effect of the remaining budget on
expected quality is significant only among people with price–quality
schema values of 4.16 or higher (about 77 % of the participants; see
Fig. 7).
This study provides further evidence that a mindless overapplication
of the price–quality heuristic is the underlying reason that bid amounts
influence expected quality. We show not only that the effect of bid
amounts on expected quality is moderated by price–quality schema but
also that the effect disappears when participants are reminded of the
arbitrary nature of their bid amounts.
13. Study 8
This study tests another downstream effect of self-decided prices –
greater choice satisfaction. We predict that self-decided prices lead to
greater satisfaction among people who more strongly believe that price
and quality are related. Additionally, we rule out an alternative expla­
nation - that participants believe the game organizers change the items
on the wheel so that the item values are commensurate to bid amounts.
To eliminate this possibility, all participants were informed that the
wheel items are pre-fixed and do not change with their bid amount.
S. Mukherjee and M. Pandelaere Journal of Business Research 160 (2023) 113769

Study 7: Expected quality as a function of the salience of the arbitrary nature of self-defined

prices

Fig. 6. Study 7: Expected quality as a function of the salience of the arbitrary nature of self-defined prices.

As predicted, the choice satisfaction is higher in the large budget con­

dition (Mlarge_budget = 5.72, SD = 1.54) compared with the small budget
condition (Msmall_budget = 4.45, SD = 2.26; F(1, 89) = 10.07, p =.002, d =
0.66).
To test for moderation by the price–quality schema, we estimated a
general linear model that contained the remaining budget (as a dummy),
price–quality schema, and their interaction. We find a significant
interaction (F(1, 87) = 5.21, p =.025). A Johnson-Neyman significance
analysis helps unpack the significant interaction between the pri­
ce–quality schema and remaining budget. The effect of the remaining
budget on post-bid satisfaction is significant only among people with
price–quality schema values of 4.89 or higher (75.82 % of the partici­
pants; see Fig. 8).

14. General discussion

Consumers tend to infer product quality and value from prices.

Although the actual price–quality relation often is weak, there is at least
some logical basis for this inference; in competitive marketplaces, higher
Fig. 7. Study 7: Johnson-Neyman region. quality should fetch higher prices. The question that we address in this
article is whether consumers still apply this price–quality heuristic to
13.1. Design and procedure infer quality when they determine the prices themselves. This rather
mindless application of the heuristic lacks any logical basis. If anything,
Ninety-one participants (49 % female; Mage = 39.54) from online consumers should decide the price on the basis of the value they assign
consumer panel (Amazon MTurk) took part in this study in exchange for to a product.
token compensation. They were randomly assigned to one of two con­ In eight studies, we find evidence that consumers’ quality expecta­
ditions (remaining budget: $5 vs $15; all with the actor perspective). tions are partly based on whatever they decide to pay, even when they
The experimental procedure in this study remained similar to that in
study 6, with some prominent changes. First, before participants sub­
mitted their bid amounts, they were informed that the items on the
wheel were pre-fixed and would not change depending on their bid
amount. Second, the remaining budget in the small (large) budget
condition was $5 ($15). Second, respondents were shown that they won
a wall calendar. The pictures on the pages of the wall calendar were then
displayed to the participants. Participants then indicated their post-bid
satisfaction with the wall calendar by responding to two seven-point
Likert-scale items (α = 0.92) (“How satisfactory are the pictures in the
wall calendar?” and “How satisfied are you with the wall calendar?”).
Participants then filled out a four-item scale to measure their pri­
ce–quality schema (α = 0.92; Lichtenstein & Burton, 1989). These scale
items are in Appendix E.

13.2. Results and discussion

The bid amount in the small budget condition (Msmall_budget = $4.29,

SD = 1.20) again is lower than that in the large budget condition
(Mlarge_budget = $14.14, SD = 3.38; F(1, 89) = 308.24, p <.001, d = 3.88). Fig. 8. Study 8: Johnson-Neyman region.

10
S. Mukherjee and M. Pandelaere
clearly should not. Studies 1, 2, and 3 show that consumers expect a
higher quality for a product when prices appear in descending rather
than ascending order. This is because people decide on a higher price in
the former situation. This effect occurs as long as the difference between
adjacent prices is not too high (study 1), and when people hold no strong
prior expectations of product quality (study 2). We also replicate the
results in a consequential study (study 3). Our mediation models suggest
that self-decided prices are not merely derived from anticipated quality;
rather, self-decided prices serve to update any initial assessment con­
sumers made. This is important as self-decided prices are rather
malleable (Ariely et al., 2003) and are therefore often affected by
irrelevant contextual factors, like prior exposure to prices for other
products (Adaval & Wyer, 2011; Nunes & Boatwright, 2004), the order
in which consumers see prices (Hong et al., 2015; Suk et al., 2012), and
even the weather (Riener & Traxler, 2012).
Why does this effect occur? Social psychology offers two related
explanations for it. On the one hand, consumers could turn to their
behavior to infer the cause of it, just like observers would do. This self-
perception theory (Bem, 1967) would thus imply that consumers look at
the price they pay to infer how much they like the product or how good
they think the product is. A rival theory suggests that people feel an
uncomfortable tension when their behavior is not in line with their
thoughts, and they often unconsciously adjust the latter to become more
compatible with their behavior in order to reduce the psychological
tension. This cognitive dissonance theory (Festinger, 1962) would thus
suggest that consumers would feel uneasiness if they would spend a lot
of money on something they think is not worth it; as a result, they would
adjust their thoughts about the quality and value of an object to closely
track what they paid for it.
Studies 4–8 use a paradigm in which self-decided prices are entirely
determined by the context. Any rational self-observer should therefore
refrain from drawing any inferences from it. In addition, psychological
tension only make sense for actors, not observers. We show that the
context still affects expected quality even when bids are entirely dictated
by the situation and even when one merely observes someone else’s bid
(Study 5). We therefore believe that a better explanation is that people
mindlessly apply a price–quality heuristic to any price they observe. In
support, only people who typically associate price and quality show the
effect (Studies 6–8), but they no longer do so when the arbitrary nature
of a self-decided price is made salient (Study 7).
An intriguing question, though, is why consumers would view their
self-decided prices as a credible signal of market value? While the
answer to this question falls outside the scope of the present research, we
surmise that consumers probably assume that other, similar consumers
would probably pay the same as they do (cf. false consensus effect; Ross,
Greene & House, 1977). If so, consumers might think that the price they
are paying for a product, even if they decided it for themselves, may be
close to the market price. As a consequence, they may assume that the
relationship between price and quality is the same for prices provided by
the market as well as for prices they decide upon themselves. We leave it
to future research to test this speculation.
We thus make several contributions to pricing research. We advance
existing theory about how price functions as a proxy for quality, by
showing that consumers use not just marketer-provided price informa­
tion to draw product inferences, but also self-decided prices. In addition,
we confirm that they do so through a mindless application of a pri­
ce–quality schema. Further, the paradigm we use in studies 4 through 8
is a conservative test for the underlying effect and its mechanism
involving price-quality schema. This shows that price-quality schema is
much stronger than earlier expected such that it can influence quality
expectations even when there is no logical basis to do so. By demon­
strating that price presentation order affects perceived product value,
we add to research that identifies its influence on willingness to pay
(DeMoranville et al., 2015; Suk et al., 2012) and bid amounts in auctions
(Cheema et al., 2012). This important finding is relevant for different
situations in which price presentation orders tend to vary, such as
11
Journal of Business Research 160 (2023) 113769
auctions, negotiations, and salesperson–customer interactions.
In a somewhat more tangential way, our research contributes to price
presentation order research, in that it reveals that price step sizes can
significantly influence auction outcomes. This manipulation was
admittedly based on intuition, but future research could also test when
and why step sizes influence self-decided prices. It appears that, on
average, participants “stepped away” from an initial price several times,
but not too often. Maybe, consumers have a lay belief that, in negotia­
tions, it is important to move away a couple of times from an opening
bid. Moreover, consumers may differ in this lay belief with some feeling
comfortable to turn down an offer several times, while others may feel
they should stay closer to an initial bid. Future research can further
investigate this possibility. In addition, it is possible that step sizes may
vary within the same auction/negotiation. Future research could test
how intra-order variability of step sizes affects final self-decided prices,
and thus, consumer inferences about the underlying product.
Finally, we contribute to growing literature on PWYW pricing (Bar­
one et al., 2017; Chen et al., 2017; Gneezy et al., 2012; Jung et al., 2016;
Kim et al., 2009, 2014), which thus far has focused primarily on how
price anchoring and contextual factors influence consumers’ self-
decided prices. As our contribution, we note that self-decided prices in
a PWYW pricing context can influence the inferences that consumers
make about products. In this regard, it is interesting to note that travel
websites such as Priceline.com and Hotwire.com offer a blind bidding-
based pricing scheme, not unlike the experimental game in our studies
4–8.
This research also has implications for managers. While PWYW
pricing schemes could be used by managers to increase demand, our
findings show that allowing consumers to choose lower prices may hurt
the firm in the longer run. One way to mitigate the effects of lower self-
decided prices, and corresponding lower quality expectations would be
to nudge consumers towards high self-decide prices in PWYW contexts,
not only for immediate firm profitability reasons, but also for longer
term product quality perception and consumer satisfaction purposes.
Given the impact of consumer generated ratings and reviews on firm
success (Barton, 2006; Marchand, Hennig-Thurau, & Wiertz, 2017),
managers should gain substantially from consumers providing higher
(more positive) quality/satisfaction ratings (reviews) in part due to
choosing higher self-decided prices; this may be especially relevant for
newly developed products (Cui, Lui, and Guo, 2012). As our research
shows, nudging to higher prices could be achieved by having consumers
anchor on high initial prices. Moreover, prior research (Janiszewski &
Uy, 2008) shows that people deviate less from precise prices than from
less precise ones. So, precise initial prices may indeed lead to higher
final self-decided prices, and higher product quality expectations. A
second possibility, also shown in our research, is to offer consumers
strong, credible quality cues (e.g., awards, or ratings). Our findings
indicate that even when consumers decide on relatively low prices, the
presence of strong quality cues eliminates the effect of self-decided
prices on expected quality. To wit, strong quality cues lead to strong
quality expectations, regardless of the self-decided price.
Further research could attempt to integrate our findings with
research on the winner’s curse (Bajari & Hortacsu, 2003; Thaler, 1988),
which suggests that people who win an auction end up overpaying for
the product, at least from an economic perspective. Yet the net psy­
chological outcome of bidding high amounts may be positive; according
to our findings, bidding large amounts may cause the bidders to increase
their valuation of the product, which may increase the satisfaction they
derive from obtaining the product. Also, our findings may have impli­
cations for consumer satisfaction driven by fairness perceptions related
to paying a relatively higher price for a product as compared to other
consumers. It may be possible that the higher satisfaction associated
with obtaining a product with higher perceived quality, albeit at a
higher price, may alleviate negative feelings associated with the
perceived unfairness of paying a relatively higher price. Similarly,
buying a product by paying the first (and highest) price a salesperson
S. Mukherjee and M. Pandelaere
quotes might bestow the psychological benefit of enhanced subsequent
valuation of the product and thus higher satisfaction from its use.
Conversely, buying a product after much haggling with a salesperson
and managing to obtain it at a rock-bottom price potentially could have
negative consequences on subsequent product valuation and derived
satisfaction from use.
Still, even if a high price increases anticipated satisfaction, it is un­
clear how it affects actual satisfaction. On the one hand, a placebo effect
could push actual experiences to align with expectations (Gilbert &
Wilson, 2000; Kahneman & Snell, 1992; Wilson et al., 2000). On the
other hand, satisfaction research suggests that increased expectations
are harder to meet, so they may lead to lower post-consumption satis­
faction (Mandel & Nowlis, 2008). We tested the effect on satisfaction in
Study 8 and found that when the context drives up self-determined
prices, consumers are subsequently more satisfied. Still, we do not
claim that this result is general, and we call for future research to explore
more in-depth how deciding on a price affects satisfaction.
Future research can also examine the interplay between initial and
final quality expectation more in depth. We believe that consumers form
an initial expectation, which they then update. We did not ask for an
initial expectation in any of our studies, because this may make the
purpose of our studies too obvious to participants, and may then lead to
demand effects. However, one can still wonder what would happen if
participants have to specify their expectations before indicating their
self-decided price. Possibly, then, participants would be less likely to
change their expectations much, if any, based on the prices they ulti­
mately decide upon. Relatedly, in Study 2, we gave some participants a
very strong quality cue about a product and found that this eliminates
the effect of context on expected quality. Presumably, consumers update
their expectations less if they are confident about their initial quality
expectation. Future research can test this idea. Future research could
also further test our proposed process involving mindless application of
the price-quality heuristic using alternative experimental procedures,
but for now, we can conclude that contextual factors may not only affect
self-decided prices, but also expected quality.
CRediT authorship contribution statement
Sudipta Mukherjee: Conceptualization, Data curation, Writing –
original draft, Writing – review & editing. Mario Pandelaere:
Conceptualization, Data curation, Writing – original draft, Writing –
review & editing.
Declaration of Competing Interest
The authors declare that they have no known competing financial
interests or personal relationships that could have appeared to influence
the work reported in this paper.
Data availability
Data will be made available on request.
Appendix A. Supplementary data
Supplementary data to this article can be found online at https://doi.
org/10.1016/j.jbusres.2023.113769.
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Sudipta Mukherjee (mukherjees@xavier.edu) is an Assistant Professor of Marketing at the
College of Business, CSU Sacramento, Sacramento, CA 95819, United States.
Mario Pandelaere (mpand@vt.edu) is an Associate Professor of Marketing at the Pamplin
College of Business, Virginia Tech, Blacksburg, VA 24061 and Professor at Department of
Marketing, Innovation and Organisation, Ghent University, Tweekerkenstraat 2 9000
Ghent, Belgium. This research is based on part of the first author’s dissertation, which was
completed under the guidance of the second author. The first author is the designated
corresponding author.