Left-Digit Effect in Tourists' Price Evaluations: The Moderating Role of Price Level and Composite Price
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abstract
Past research has found that the effect of odd-ending price (e.g., $9.99) can be explained by the left-digit effect whereby the leftmost digits of both prices influence the comparison of a pair of prices. However, research on psychological pricing has mostly focused on low-priced retailing products and the focal products price per se. Informed by prospect theory, this study extended this line of work by examining how the effect of left-digit pricing varies with the magnitude of hotel room rates (i.e., price level) and the size of prior investment in other travel components (i.e., composite price). The results of 222 experimental revealed that left-digit pricing was an effective tactic to increase purchase intentions for low-priced hotels. It was also found that tourists who have made a substantial prepayment on other travel components were responsive to the tactic. Additionally, composite price and left-digit pricing were found to moderate the relationship between perceived value and purchase intentions.
