The Role of Cognitive Processes in Explaining Reactions to Price Changes for Leisure Services

Authors

  • Ronald E. McCarville

Keywords:

Price, demand, rationality, information processing, price, discount.

Abstract

The traditional rationalist model of the price/demand relationship is compared and contrasted with an information-processing or cognitive model. Each is reviewed in terms of its utility to the administrator. The rationalist model assumes an inverse relationship between demand and price. The information processing perspective assumes that price-related stimuli are interpreted, manipulated, and assessed in such a way that rising prices may not lead to decreased demand. Several variables that influence the way in which price-related information is perceived are considered. The notion of price elasticity suggests that some participants may be more sensitive to some price changes than to others. Comparativeprice information may contribute to the acceptability of new price levels because it can move perceptual price anchors or expectations closer to new price levels. Administrative actions that can influence response to price increases and subsequent demand for services are suggested.

Published

1990-07-04

Issue

Section

Regular Papers