Consumer decision making. The effect of information on willingness to pay and performance

Resumen

Online purchase decisions are unique in that consumers are confronted with information from a variety of sources. Drawing on uncertainty reduction theory, this thesis aims to understand the role of information in consumers’ decisions. Specifically, it examines three sources of information. First, consumer-to-consumer information or electronic word of mouth (eWOM). Second, consumers’ internal information, such as previous experiences and reference prices. Third, peer-to-peer information on sharing platforms. The empirical context for the studies that this thesis comprises is the hospitality industry. Contrary to goods, services are more difficult to assess before consumption due to their inseparability nature. Moreover, the decision to book an accommodation entails high levels of consumer involvement. Results coming from an online experiment suggest that eWOM plays a major role in determining consumers’ willingness to pay (WTP). Past purchase behaviour also affects consumers’ WTP. In particular, internal reference prices (IRP) moderate the relationship between eWOM and consumers’ WTP. Beyond this, the effect of purchase frequency on consumers’ WTP is mediated by IRP. With respect to peer-to-peer information, results from a semantic analysis of Airbnb profiles reveal that individuals provide information about various topics when presenting themselves on sharing platforms. More important, self-presentations evoking social aspects lead to higher performance. In addition, the effect of the length of self-presentations on performance exhibits decreasing returns. This thesis contributes to previous literature in several respects. First, it represents the first attempt to evaluate the impact of eWOM on consumers’ WTP. Second, the inclusion of internal information to explain consumers’ WTP is novel. Third, it uncovers the role of self-presentations in boosting performance in the sharing economy. Finally, the findings of this thesis also have relevant implications for hospitality operators. Apart from the inclusion of online reputation (i.e., consumers’ ratings), accounting for consumers’ reference prices in pricing strategies seems to be essential for revenue maximization. Furthermore, these findings provide insightful recommendations for individuals operating on sharing platforms.