Price Expectation and Price Recall Error: An Empirical Study

Abstract

Expectations are known to affect the encoding and recall of stimuli. In this study the impact of deviations from price expectation (reference price) on price recall error is assessed. We found that an assimilation pattern most adequately represents the relationship between deviation from price expectation and price recall error. When individuals err in price recall they err in the direction of their price expectation, i.e., an expectation effect. As hypothesized, this effect is much stronger and more consistent for less involving products than for more involving products.