The Effect of Prior Knowledge on Price Acceptability and the Type of Information Examined

Abstract

This article assesses whether differences in prior knowledge result in differences in (1) price acceptability and (2) the extent to which different types of information are examined. Using a personal computer-based methodology, subjects who varied in their prior product knowledge provided price responses, and the time they spent examining various kinds of information was measured. Acceptable price-range end-points (price limits) were found to be lowest for low-knowledge subjects. Further, the extent to which price and related extrinsic information was examined was found to be lowest for moderately knowledgeable subjects. Results from a second study provide substantive support for the claim that increasing prior knowledge is accompanied by an increase in both limits of the acceptable price range.