SSRN-Placebo Effects of Marketing Actions: Consumers May Get What they Pay For by Baba Shiv, Ziv Carmon, Dan Ariely

Ths is why I often think I should charge for the FinanceProfessor.com blog.

VERY interesting!!!


Placebo Effects of Marketing Actions: Consumers May Get What they Pay For
By BABA SHIV, Ziv Carmon, and Dan Ariely

Their abstract:

Abstract:
"We demonstrate that marketing actions such as pricing can alter the actual efficacy of products to which they are applied. These placebo effects stem from activation of expectancies about the efficacy of the product, a process that appears not to be conscious. In three experiments we show that consumers paying a discounted price for a product (e.g., an energy drink thought to increase mental acuity) can end up deriving less actual benefit from consuming this product (e.g., they are able to solve fewer puzzles) compared to consumers who purchase and consume the exact same product but pay its regular price. Our studies consistently support the role of expectancies in mediating this placebo effect. We conclude by discussing theoretical, managerial and public policy implications of the findings."