An empirical test of theories of price valuation using a semiparametric approach, reference prices, and accounting for heterogeneity

Arbeitspapier

In this paper we estimate and empirically test different behavioral theories of consumer reference price formation. Two major theories are proposed to model the reference price reaction: assimilation contrast theory and prospect theory. We assume that different consumer segments will use different reference prices. The study builds on earlier research by Kalyanaram and Little (1994); however, in contrast to their work, we use parametric and semiparametric approaches to detect the structure of the underlying data sets. The different models are tested using a program module in GAUSS that was able to account for heterogeneity. The model types were calibrated by a simulation study. The calibrated modules were then used to analyze real market data.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SFB 649 Discussion Paper ; No. 2005,057

Classification and Topics

• Classification: Wirtschaft ; Semiparametric and Nonparametric Methods: General ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models ; Single Equation Models; Single Variables: Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities ; Consumer Economics: Empirical Analysis ; Marketing

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Boztuğ, Yasemin ; Hildebrandt, Lutz
• Event: Veröffentlichung
• (who): Humboldt University of Berlin, Collaborative Research Center 649 - Economic Risk
• (where): Berlin
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/25076
• Last update: 10.03.2025, 11:44 AM CET