Introduction


At times, shopping can be a matter of convenience and necessity. Retailers often take advantage
of customers by implementing opportunistic pricing. With many customers in a rush, how aware
are they of price differences? Specifically, given the level of price fluctuation between various
retail outlets, do students have a reasonable expectation of how household supplies should be
priced? This research study aims to understand how accurately students can price common
household items given overpriced pricing anchors.

The objective of this research was to determine if time is a constraining factor in how accurately
respondents can price items that are artificially inflated. Test subjects were presented with a
questionnaire showing images, descriptions and an artificially inflated price for a product and
then asked to correctly price the item. This study is valuable in recognizing several principles in
pricing strategies. The results can be used to help retailers establishing prices, and it reveals
informational biases given a product in isolation in a retail outlet. The goal of this study is to
determine if buyers under time and stress constraints will be less sensitive to paying higher
prices than those who know about test products before hand and have unlimited time to make a
decision.

Conceptual
Development
and
Hypothesis


When setting product prices, it is important to consider the circumstances that will make a buyer
price-sensitive. These factors include the product’s price, how it is presented in context to
environmental factors such as the amount of information that is available, the location it is being
sold from, the time the customer has to make the purchase decision, the amount of control they
have in the buying decision, the amount of knowledge they have about a particular product and
the typical price they would pay for the product, amongst others. To test for these factors, this
research study focused on creating a stressful environment by the simple means of having a
questionnaire with a time limitation and an associated unlimited time questionnaire as a control.
This was chosen over a test or any precondition of stress as it would be too difficult to control or
measure stress otherwise due to the limited amount of resources and sample size. The
participant’s knowledge was also considered and within the data the knowledge of the participant
would be gauged and split into a subset based on a predetermined threshold. Through these very
specific criteria there were two factors that were to be investigated with the following
hypotheses.

Hypothesis 1: Price estimation accuracy adversely affected due to stress

This is the principle hypothesis of the study. Given a stressful environment, how likely are
consumers to make poor decisions about their purchases in context to how much they could be
paying for a product. For this hypothesis to be proven true the test group with the shortened time
span would have to have a high correlation with inaccurate pricing estimates.

Hypothesis 2: Product knowledge has an association with price accuracy

This secondary hypothesis is considered a moderating variable as it is difficult to control without

pre-screening. By having respondents in both test groups answer a questionnaire prior to the test
respondents can be stratified based on their responses and thus it is assumed those who have a
 The
Affect
of
Time
Stress
on
Sensitivity
to
Price
Anchoring

Cameron,
Cappellacci,
Liu,
Llorente,
Sommerfeld,
You

JoAndrea
Hoegg,
COMM
363
‐
102

higher product knowledge would have more accurate estimates of price.

Variables

Two independent variables and several dependant variables were controlled in order to maintain
valid responses.

Independent Variables
Level of Stress from Time Limits
• Factors: Not Timed (Group A), Timed (Group B)
• Only two factors were chosen to highlight the contrast between the perceived stressful
environment and one that is relatively stress free. More than two factors would make the
data significantly more difficult to measure due to the small test group size.

Product Knowledge/Purchasing Frequency

• A pretest asked about purchasing frequency for each product without mentioning brand
and gave an approximation of the shopping behaviours of test respondents.
• Collective scores on product knowledge can then be aggregated then correlated to
determine variability.

Dependent Variables
Variability from Anchor Price
• A key indicator of the test, the variability from anchor price will determine the validity of
the first hypothesis by showing the respondent’s notions of a fair price.
Length of Time to Answer the Test
• In test groups that are not timed this variable could be used as an indicator.
Accuracy of Response
• This will correlate with the amount of product knowledge and time.
Mood Change from Beginning of Survey to End
• An indicator to verify stress levels, though in the context of this study more quantitative
than qualitative.
• Stimulus: Products with inaccurate prices and descriptions/photos
o Chose brand named household goods
o All overpriced by 25 percent

Developing
the
Test
Procedure


In order to determine how prices can be estimated accurately, a test with the defined stimuli was
created. Each respondent was presented with a survey that featured a consistent series of
questions featuring a brand named household product overpriced by 25 percent. After
performing a pre-test the final test was set between subjects and divided into two groups. Group
A was not given a time limit while Group B was given a 2 minute 30 second time limit that
reflected a significant shortfall in time as the average time completion in the unrestricted pre-test
was 3 minute 15 seconds. This decrease in available time created a higher sense of stress in the
pre-test.


 2

 The
Affect
of
Time
Stress
on
Sensitivity
to
Price
Anchoring

Cameron,
Cappellacci,
Liu,
Llorente,
Sommerfeld,
You

JoAndrea
Hoegg,
COMM
363
‐
102

Procedure

1. Participants were asked a series of screening demographic questions.
o Shopping habits (frequency & stores frequently visited)
o Current mood
o The participant was the only one in the room Parts I & II
2. Participants were asked a series of questions on product knowledge.
o Question Set 1 – Purchasing frequency for each of the 24 products
o Question Set 2 – Product knowledge for each of the 24 products
3. Participants were given an explanatory paragraph to read. Once complete, they notified
the test supervisor. Supervisors made sure participants clearly understood test instructions
(pretest had revealed that there were several possible misunderstandings).
o Group A was told: “Take as much time as necessary” after which the supervisor
would leave the room
o Group B was told: “You have 2.5 minutes to complete the pricing. You will be
crunched for time so you will need to go as fast as possible”. The supervisor was
present and had a timer counting down 2.5 minutes for the participant to complete
the pricing section (if participant did not finish, they were cut off and sent to the
final component)
o The 24 products were shown in a separate booklet with descriptions, prices, and
photos.
o The same supervisor was used on all participants
4. Concluding questions: Participants were asked open and qualitative questions concerning
their affective state and how the perceived the test to determine changes in affect.

Experimental
Controls

• Hypothesis guessing – each participant received the exact same instructions and it was a
between subjects design for the timing
• Peer influence – the participants were in the room alone. In Group B a supervisor was in
the room for the product pricing section. Monitoring the subject was to increase the
amount of stress. The test supervisor would first clarify the experiment and stay silent
during the actual experiment. They also ensured that participants could easily see the
amount of time they had left on a large timer. Participants were also unable to see or hear
anyone else outside of the room.
• Test procedure consistency – participants were given the exact same instructions at the
beginning (their test letter, A or B, and that they were not to touch the booklet until told).
The same two supervisors were used on all participants. This ensured consistent
instructions and minimal variation in experimenter interaction.
• Avoiding Carry-over effects – the product knowledge section occurred before the
products were priced so that participants would not skew the results by adjusting their
product knowledge responses after doing the pricing exercise. This may occur due to
consistency bias or social desirability issues as they may feel less knowledgeable or
unsure of their knowledge after performing the test.


 3

 The
Affect
of
Time
Stress
on
Sensitivity
to
Price
Anchoring

Cameron,
Cappellacci,
Liu,
Llorente,
Sommerfeld,
You

JoAndrea
Hoegg,
COMM
363
‐
102

Results
Analysis

The results were analyzed to understand what caused respondents to be more or less accurate in
pricing the products. Because of the small sample size and the large range of answers, medians
and standard deviations were compared rather than averages. This helped to eliminate the large
outliers.


The medians and standard deviations are written down as percents. The percents represent how
far away respondents priced products from the accurate prices. For example, if a respondent
priced a product at $0.85 and the accurate price was $1, their response was 15% away from the
accurate price. Thus, the lower the percentage, the more accurate the respondents response.

Hypothesis 1 Confirmed: Price estimation accuracy adversely affected due to stress

Group A, which had an unlimited amount of time, was slightly more accurate in pricing the
products. The median response for group A was only 14.54% away from the accurate price,
while the median response for group B was 16.68% away from the accurate price.

15.18%

B

16.68%


standard
deviaJon

median

16.73%

A

14.54%


13.00%
 13.50%
 14.00%
 14.50%
 15.00%
 15.50%
 16.00%
 16.50%
 17.00%


It is interesting to note that Group B’s standard deviation was lower than Group A’s. This may
be due to the fact that under time constrained scenarios people use shortcuts and heuristics. Such
heuristics may then produce more consistent.


 4

 The
Affect
of
Time
Stress
on
Sensitivity
to
Price
Anchoring

Cameron,
Cappellacci,
Liu,
Llorente,
Sommerfeld,
You

JoAndrea
Hoegg,
COMM
363
‐
102

Further, once respondents completed the survey, they were asked to reflect on their mood. The
chart below compares the median and standard deviation of the respondents across different
moods.

30.00%


24.60%

25.00%
 22.66%

20.06%

20.00%
 17.41%


15.00%
 12.32%

9.24%
 Median

10.00%

Standard
DeviaJon


5.00%


0.00%


This chart clearly shows that respondents who felt stressed and rushed after the survey were less
accurate in their pricing. And although we didn’t initially test for it, it also appears that those
who felt tired during the survey also were unable to accurately price the products. This may
simply be due to the fact that little effort was given by such respondents to answer to the best of
their knowledge. Along similar lines, the angry respondents were more accurate in pricing,
perhaps because they exerted more effort to accurately price items.
Furthermore, when the answers of respondents who said they were stressed, tired, or rushed were
taken out, there was no significant difference in the pricing accuracy between Group A and
Group B. The median value for Group A was 14.39%, while the median value for group B was
14.89%. Thus, Hypothesis 1 is only confirmed to the extent that the survey was able to produce
time constrained and stressed symptoms in the survey respondents.
Hypothesis 2 Accepted: Product knowledge has an association with price accuracy

The analysed data has accepted that product knowledge can be associated with price accuracy.
However, this was only found to be accurate at the extremes. Those who said they had
considerable knowledge about a product were more accurate than those who said they had no
knowledge about a product. However, this was not always the case when comparing survey
respondents who identified themselves as having a degree of product knowledge between these
two extremes. The chart below helps to identify this.


 5

 The
Affect
of
Time
Stress
on
Sensitivity
to
Price
Anchoring

Cameron,
Cappellacci,
Liu,
Llorente,
Sommerfeld,
You

JoAndrea
Hoegg,
COMM
363
‐
102


Considerable
knowledge

12.60%


Some
knowledge

18.90%


Standard
DeviaJon

Median

LiPle
knowledge

14.89%


No
knowledge

16.64%


0.00%
 5.00%
 10.00%
 15.00%
 20.00%


The median values of those who had no knowledge as compared with those who had
considerable knowledge were 16.64% and 12.60%, respectively. Thus those with considerable
knowledge were on average about 4% more accurate. Further, because those who had
considerable knowledge had a lower standard deviation, they were also consistently more
accurate. This trend did not hold up for those that identified themselves as having little or some
knowledge about specific products. This result is surprising yet there are several factors that can
account for this. Given the small sample size it may be difficult to determine any significance
between the two groups. Also, product knowledge does not only represent knowledge about
product price, but it may represent a number of different facts and associations a consumer may
have with a product.
Because product knowledge may not accurately represent a consumer’s ability to price a product,
purchase frequency was also used as an independent variable. The chart below compares the
medians and standard deviations of respondents based on how often they purchased a product.

Every
month
or
less
 11.07%


Every
2‐3
months
 15.11%


Every
6
months
 14.39%
 standard
deviaJon


Once
a
Year
 median

16.56%


Never
 16.81%


0.00%
2.00%
4.00%
6.00%
8.00%

10.00%

12.00%

14.00%

16.00%

18.00%



 6

 The
Affect
of
Time
Stress
on
Sensitivity
to
Price
Anchoring

Cameron,
Cappellacci,
Liu,
Llorente,
Sommerfeld,
You

JoAndrea
Hoegg,
COMM
363
‐
102

This chart further emphasizes the trend proposed by the chart based on product knowledge. The
hypothesis only holds up when you compare those who frequently purchased the product and
those who never purchased the product. Those who purchased the product the most were more
accurate in pricing it than those who never purchased it.

Interaction
Affects

The results were analyzed to see if there were any interaction affects between the different
independent variables tested. Hypothesis 1 tested the effect that stress and time constraints have
on pricing accuracy while Hypothesis 2 tested the effect that product knowledge has on pricing
accuracy. The table below attempts to analyze the interaction affects.

considerable
knowledge


some
knowledge

b

a

liPle
knowledge
 control


no
knowledge


0.00%
 5.00%
 10.00%
 15.00%
 20.00%
 25.00%


The respondents were broken up into four groups based on their product knowledge. They were
then further separated into two groups, Group A, which had unlimited time, and Group B, which
was under time constraints. In some cases Group A was more accurate than Group B, and in
other cases Group B was more accurate in than Group A. Thus, the data shows that there is little
interaction between the two variables.

Conclusions

While very interesting to conduct this study is telling of how the average consumer price
discriminates. The fact that the first hypothesis was confirmed shows that a stressful situation
does indeed impact consumers and that while in a state of distraction or agitation most
consumers will not be aware that their sensitivity to prices has been decreased. This is counter
indicative of the principle that people who are happy are more care free and those who are not
are more cautious, yet the shortfall of time is important to remember as a factor that influences
the situation in an unexpected manner. The fact that the second hypothesis was accepted is also
telling in its own right. However, product knowledge was only a good predictor of pricing
accuracy when comparing someone who has knowledge about the product with someone who
has absolutely zero knowledge of the product. This has implications on the just noticeable


 7

 The
Affect
of
Time
Stress
on
Sensitivity
to
Price
Anchoring

Cameron,
Cappellacci,
Liu,
Llorente,
Sommerfeld,
You

JoAndrea
Hoegg,
COMM
363
‐
102

difference in that small price increases are far less likely to be caught by customers. Overall the
study produced results that could be further investigated and strengthened with a larger test
group as preliminarily the results are fairly limited.

Limitations


Inability Error
During pre-testing, some participants failed to provide an accurate price in the survey that was
below the inaccurate price given. This was likely due to a misunderstanding with the instructions
as all the product prices given were overpriced. It may also be attributed to a lack of motivation
or that participants could not remember the circumstances to which the question refers. After
changing the test procedure to ensure that the participant understood the instructions, there were
still a few participants who put higher prices for one or two products. In future studies, removing
the limitation that prices must be below the accurate price will likely reduce this error.

Attention Span of Participants

The complexity of the task with 24 products to price was intentionally stressful as to produce the
desired results. However, the high number of products may have reduced the ability of
participants to generate accurate results towards the end of the survey. With a small sample size,
these effects are only exacerbated. In future, providing a higher motivation to complete the study
is likely necessary.

Production of Stress and Consistency Bias

It is unlikely that the time limit in this study effectively produced the desired level of stress.
Participants dealt with the stress differently, with some not even reporting any significant mood
change or that they did not enjoy the study. There may have also been a consistency bias with the
mood questions asked at the beginning and end of the survey. In order to produce the more
accurate and conclusive results, a future study is needed that will produce a more stressful
environment for participants in Group B.


 8

 The
Affect
of
Time
Stress
on
Sensitivity
to
Price
Anchoring

Cameron,
Cappellacci,
Liu,
Llorente,
Sommerfeld,
You

JoAndrea
Hoegg,
COMM
363
‐
102

Appendices
Appendix 1
Screening demographic, shopping habit and mood questions


 9

 The
Affect
of
Time
Stress
on
Sensitivity
to
Price
Anchoring

Cameron,
Cappellacci,
Liu,
Llorente,
Sommerfeld,
You

JoAndrea
Hoegg,
COMM
363
‐
102



 10

 The
Affect
of
Time
Stress
on
Sensitivity
to
Price
Anchoring

Cameron,
Cappellacci,
Liu,
Llorente,
Sommerfeld,
You

JoAndrea
Hoegg,
COMM
363
‐
102


Appendix 2
Product Knowledge Questions
Note: to conserve paper, only 2 of the 24 products are shown in the second
question, but their order is the exact same as the first question.


 11

 The
Affect
of
Time
Stress
on
Sensitivity
to
Price
Anchoring

Cameron,
Cappellacci,
Liu,
Llorente,
Sommerfeld,
You

JoAndrea
Hoegg,
COMM
363
‐
102



 12

 The
Affect
of
Time
Stress
on
Sensitivity
to
Price
Anchoring

Cameron,
Cappellacci,
Liu,
Llorente,
Sommerfeld,
You

JoAndrea
Hoegg,
COMM
363
‐
102


Appendix 3
Explanatory paragraph, product booklet, and survey questions
Note: to conserve paper, a table with the products, prices and descriptions is shown instead of the
whole product booklet. Only the first page of the booklet and survey is shown to depict the format.

Product Name Price Description


 13

 The
Affect
of
Time
Stress
on
Sensitivity
to
Price
Anchoring

Cameron,
Cappellacci,
Liu,
Llorente,
Sommerfeld,
You

JoAndrea
Hoegg,
COMM
363
‐
102

Ziploc Sandwich Bags, $3.11 Ziploc Sandwich Bags are ideal for packing favourite lunch sandwiches
100’s and snacks, or storing small amounts of leftovers in the fridge.
Black & Decker $37.49 Handheld vacuum cleaner, Powerful for quick and easy cleanup,
Dustbuster Lightweight and compact
Vaseline Jar, 375g $5.86 Helps prevent diaper rash, soothing and protecting skin
Garnier Fructis Clean & $6.23 Garnier Fructis Clean & Fresh Shampoo makes hair soft to touch;
Fresh Shampoo, 384ml smooth, shiny and easy to style
Crest Cavity Protection $3.74 Get cavity protection for your teeth to the roots. With regular brushing,
Toothpaste – Regular - Crest Cavity Protection toothpaste will help fight cavities and leave your
170ml breath feeling refreshed
Jergens Naturals Skin $7.49 Your skin will be reinvigorated with a blend of potent antioxidants and
Renewing Daily moisturizers that smooth and rejuvenate, returning it to a state of pure,
Moisturizer, 480ml healthy-looking softness.
Black & Decker 2 Slice $37.47 Extra-wide slots with self-centering guides, Electronic toast control ,
Toaster Bagel setting , Frozen setting, High lift, Cool touch exterior
Listerine, 500ml $6.86 Listerine kills the germs that cause gingivitis, plaque, and bad breath.
Enlighten Pillar Candle $4.98 Ginger Root scented pillar candle. Great for a fresh scent in your home
Softworks Can Opener $19.99 Easy-turn handle, compact for easy storage, cuts cans quickly and easily,
durable metal construction
Sunlight Dishwashing $3.61 A lemon fresh, grease fighting, liquid dishwashing detergent that cuts
Liquid, 950ml through grease to leave dishes sparkling clean while being gentle on your
hands.
Duracell AAA Batteries, 8 $16.24 CopperTop batteries have been engineered to deliver just the right level
pack of power for most of your household need, plus, they're guaranteed fresh
for 7 years.
Tide 2X Ultra Liquid $9.98 2X Ultra Tide is 2X concentrated to give you twice the stain-fighting
Laundry Detergent, 32 power in every drop. So you get the same number of loads in a smaller,
uses more convenient bottle.
Windex Multi Task $4.36 Specially formulated to clean almost any hard surface to a sparkling
Trigger, 765ml Windex shine, perfect cleaner for kitchen and bathroom surfaces and
more.
AirWick Aerosol Air $2.99 Air Wick Aerosol Spray is the perfect way to fight unwanted odours and
Freshener bring a burst of freshness to any room in your home.
Bounty Towels, 6’s $11.24 When you choose Bounty for your home you know you have the most
absorbent and durable paper towel available. Remain cool, calm and
collected - Bounty is here to help.
Dove Deep Moisture $2.48 Dove Deep Moisture Body Wash with NutriumMoisture gives your skin
Body Wash, 55ml complete nourishment.
George Foreman Grill $99.99 With the trademark lean-friendly sloped design, movable pads, 72 inch
Indoor grill has room for 4 burgers, Hassle-free cleaning, The removable
grill plates are dishwasher safe
Colgate 350 Manual $6.24 Medium hardness, unique cheek and tongue cleaner, ultra-soft cleaning
Toothbrush bristles, raised cleaning tip
Sunbeam Professional $49.98 Includes: Spray mist, drip-free system, self-cleaning function, soft touch
Iron grip, microglide ceramic soleplate
Bounce Fabric Softener $8.74 In the dryer, try regular Bounce sheets for a soft freshness that makes
Sheets, 80’s clothes worth wearing.
3M Lint Roller, 30 sheets $5.74 Easily roll over fabrics to pick up lint, pet hair, or other fibers.
Lysol Disinfecting Wipes, $3.49 These pre-moistened, disposable wipes are a convenient way to disinfect
35’s household surfaces. Kills more than 99.9% of household germs, bacteria,
viruses, fungi, and mold.
Oral-B Floss $2.49 Clear out your teeth and gums to prevent cavities and gum disease with
Oral-B Floss..54


 14

 The
Affect
of
Time
Stress
on
Sensitivity
to
Price
Anchoring

Cameron,
Cappellacci,
Liu,
Llorente,
Sommerfeld,
You

JoAndrea
Hoegg,
COMM
363
‐
102




1.

Ziplock
Sandwich
Bags,
100’s


Ziplock
Sandwich
Bags
are
ideal
for
packing

favourite
lunch
sandwiches
and
snacks,
or

storing
small
amounts
of
leftovers
in
the

fridge.


 $3.11


2.

Black
&
Decker
Dustbuster


Handheld
vacuum
cleaner

Powerful
for
quick
and
easy
cleanup

Lightweight
and
compact




$37.49






3.

Vaseline
Jar,
375g


Helps
prevent
diaper
rash,
soothing
and

protecting
skin


$5.86


 
 15

 The
Affect
of
Time
Stress
on
Sensitivity
to
Price
Anchoring

Cameron,
Cappellacci,
Liu,
Llorente,
Sommerfeld,
You

JoAndrea
Hoegg,
COMM
363
‐
102


(Survey format was the same for all other products in the pricing section – 8 pages total)

Appendix 4
Concluding questions from the survey


 16