How do external reference prices influence online gift giving?
by Yun Kyung Oh; Ye Hu; Xin Wang; William T. Robinson
International Journal of Electronic Marketing and Retailing (IJEMR), Vol. 5, No. 4, 2013

Abstract: The authors examine the role of external reference prices in a unique form of gift giving behaviour - online gift registries. A hierarchical Bayesian analysis of fulfilment data from 555 online wedding registries reveals the probability of a gift fulfilment follows a bimodal distribution around the gift registry's average price. This is consistent with the hypothesis that online gift purchases are driven by the average price of the registry, which serves as the reference price, and two competing motivations among gift givers. These motivations are a desire for social benefits (e.g., to enhance the relationship) and a desire to limit monetary costs (e.g., to save money). The former motivation favours gifts with higher than average prices; whereas the latter favours those with lower than average prices. Because an average priced gift does not appeal to either segment, its fulfilment probability is relatively low. Finally, because gifts with extremely high or extremely low prices have less appeal for each segment, the fulfilment probability curve is bimodal.

Online publication date: Sat, 05-Jul-2014

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