Academic journal article Social Behavior and Personality: an international journal

What Price Do You Ask for the "Extra One"?: A Social Value Orientation Perspective

Academic journal article Social Behavior and Personality: an international journal

What Price Do You Ask for the "Extra One"?: A Social Value Orientation Perspective

Article excerpt

The concept of social value orientation was used to explore individuals' decisions in asking price when they had an "extra one" that someone wanted to buy. Results from an experimental study indicated that competitors' asking price was higher than those of individualists, who in turn asked higher prices than did prosocials. Regardless of the social value orientation, participants charged a significantly lower price for the "extra one" if the buyer was a friend rather than a stranger. In addition, for prosocials, market price was not an important consideration when they decided the asking price, and they exhibited cooperative behavior only under the situation of no loss.

Keywords: social value orientation, asking price, reference price, market price, cooperative behavior, loss.

A situation may exist in which you posses a product (an "extra one") which is sold out on the open market - a limited edition CD, or a ticket for a popular concert or movie, for instance. If you decide to sell the "extra one" and someone wants to buy it, for what price would you be willing to sell? The idea behind this situation is that three prices are available as possible anchors upon which people could base their answer: the price paid by the seller (PP), the price marked on the goods (PM), and the market price (MP). Prior research has identified the reference prices consumers used to evaluate the possible deal price (e.g., Thaler, 1985; Winer, 1986). According to Thaler, people would compare some reference prices in order to seek a reasonable transaction utility and make a fair trade for themselves. As Simonson and Drolet (2004) suggested, once sellers decide to sell the extra item, the market price becomes the primary reference price of the minimum asking price. In addition, individual differences in reference price utilization can affect consumers' evaluation and judgment of price information (Chandrashekaran, 2001). However, no matter which price the seller utilizes as the reference price, his or her decision affects not only his or her own outcome but also that of the buyer. Therefore, we believe that social value orientation should play an important role in this process because social value orientation is an individual's preference for his/her own outcome and/or the outcome of another person (McClintock, 1972). In addition, previous researchers have suggested that social value orientation could strongly influence how people think and behave in social settings (De Dreu & McCusker, 1997; Olekalns, Smith, & Kibby, 1996). Therefore, the major purpose of this research was to explore the decisions of a group of university students in asking price under the "extra one" situation of various social value orientations.

Social value orientation is a relatively stable personality trait, which is distinct from people's specific and variable preferences for outcome distributions (De Dreu & Boles, 1998). Since the classic work of Messick and McClintock (1968), it has been well established that individuals differ in the ways in which they evaluate outcomes for themselves and others. Although a variety of social value orientations can be distinguished (e.g., McClintock, 1972; Schulz & May, 1989), in this research we focused on empirically established typology that distinguishes among three orientations: individualism, competition and prosocial (e.g., De Dreu & Boles, 1998; Van Lange & Kuhlman, 1994; Van Lange, Otten, DeBruin, & Joireman, 1997b). While individualists tend to maximize their own outcome without considering another's outcome, competitors tend to maximize the difference between outcome for their own advantage and for that of others. On the other hand, prosocials are likely to maximize the outcome both for themselves and others and to minimize the differences between the outcome for themselves and for others.

Social value orientation has been demonstrated to affect the ways individuals behave in the settings of outcomes - settings in which self and others are the confluence of one's own and others' actions (Kelley & Thibaut, 1978). …

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