Haipeng (Allan) Chen

• Ph.D.
• Endowed Chair and Professor at University of Iowa

Partial competitor referral is a common sales influence tactic used to increase consumers’ likelihood of purchasing a focal product (e.g., a painting or table) by referring consumers to a competitor that offers a non-focal product (e.g., a frame or chairs). This study examines the impact of two types of partial competitor referrals, i.e., recommend...

Purpose Language styles of online reviews are becoming increasingly important in consumers’ purchase decisions. However, there are inconsistencies in research on the effects of literal and figurative language styles in online reviews on service consumption. Drawing upon construal level theory, this research explores the effects of literal and figur...

We report the results of surveys we conducted in the US and Israel in 2020, a time when many prices increased following the spread of the COVID-19 pandemic. To assess respondents' fairness perceptions of price increases, we focus on goods whose prices have increased during the pandemic, including some essential goods. Consistent with the principle...

The sunk cost bias, that is, people’s suboptimal tendency to continue to pursue previously invested options, has been found in many domains, and various mechanisms have been proposed. The current study offers a novel perspective for understanding sunk cost bias. Drawing on previous findings suggesting that sunk cost bias may be adaptive and promote...

Manufacturers often recall defective products. When this occurs, multiple recalls of defective products can be announced in the same statement or separate statements (i.e., concurrent vs. separate recalls). We draw upon the attribution theory to study whether and how concurrent (vs. separate) recalls of multiple products affect each recalled produc...

Bullet‐screen comments (BSCs), a type of novel user‐generated content for online videos, have been rapidly adopted in recent years. Previous research has focused on consumers' responses to the presence and quantity of BSCs but overlooked their contents. We examine how one characteristic feature of BSCs' content—lexical diversity—affects users' paym...

Many experimental studies report that economics students tend to act more selfishly than students of other disciplines, a finding that received widespread public and professional attention. Two main explanations that the existing literature offers for the differences found in the behavior between economists and non-economists are: (i) the selection...

Purpose This study aims to investigate the effect of the virtual spokesperson type on the consumers' preference for new products. To meet the consumer needs of Generation Z, virtual spokespeople have become new assistants in brand marketing. However, how virtual spokespersons drive consumer preference for new products is minimally understood. Desi...

We report the results of surveys we conducted in the US and Israel in 2020, a time when many prices increased following the spread of the COVID-19 pandemic. To assess respondents' perceptions of price increases, we focus on goods whose prices have increased during the pandemic, including some essential goods. Consistent with the principle of dual e...

Consumers often make decisions for multiple‐others when they do not know each one's true preferences. Under such circumstances, we demonstrate perceptions of enhanced preference heterogeneity for multiple‐others, relative to the perceived preference of single‐others. As a result, choices for multiple‐others are more diversified than those for singl...

When and under what circumstances might people interpret a price increase as fair and acceptable is an important question in behavioral economics. We report the results of surveys we conducted in the US and Israel in 2020, a time when many prices increased following the spread of the COVID-19 pandemic. To assess respondents’ fairness perceptions of...

Companies often use hierarchical labels to describe the products in a choice set (e.g., Bronze/Silver/Gold, or Silver/Gold/Platinum). Does the label of the tiered products influence consumer choices? Through five experiments (totaling 1,954 participants), we find a labeling effect. On the one hand, consumers are more likely to make a purchase (i.e....

CEOs often apologize in public to minimize social disapproval after a corporate crisis. We study how certain nonverbal (e.g., shooting angle) and verbal cues (e.g., message construal) in a CEO public apology affect the social disapproval of a firm and the underlying mechanism of these effects. Evidence from 117 news reports of 56 CEO public apologi...

Various decision contexts require the calculation of smaller recurring changes accumulated over time and their comparison to larger one-time changes (e.g., $100 periodic increase in monthly rent every year vs. a $1000 increase in rent at the end of 5 years). In both hypothetical and incentivized studies, we demonstrate an inaccuracy of estimations...

We assess the role of cognitive convenience in the popularity and rigidity of 0-ending prices in convenience settings. Studies show that 0-ending prices are common at convenience stores because of the transaction convenience that 0-ending prices offer. Using large store-level retail CPI data, we find that 0-ending prices are popular and rigid at co...

We assess the role of cognitive convenience in the popularity and rigidity of 0 ending prices in convenience settings. Studies show that 0 ending prices are common at convenience stores because of the transaction convenience that 0 ending prices offer. Using a large store level retail CPI data, we find that 0 ending prices are popular and rigid at...

This paper examines the effect of social exclusion and product design philosophy on consumers' design preference, its underlying mechanism, and boundary condition. We propose that rejected (vs. ignored) consumers should prefer a professional‐ (vs. user‐) designed product through increased psychological ownership. Additionally, product complexity sh...

It is generally acknowledged that sunk cost bias leads to suboptimal decisions, such as escalation of commitment. Some researchers, however, suggest that sunk cost bias can be beneficial when consumers have self-control problems. In this paper we explore the case when consumers with sunk cost bias have time-inconsistent preferences and, therefore,...

This paper examines how social exclusion moderates the role of brand anthropomorphism in advertisement effectiveness, its underlying mechanism, and its boundary conditions. Specifically, we propose that rejected (vs. ignored) consumers are more likely to purchase brands advertised as warm (vs. competent) through decreased (vs. increased) need for u...

This paper aims to examine the interaction between firm's new product preannouncement (NPP) strategies and consumers' regulatory foci on their WOM intention and the underlying mechanisms. In three experiments, we find that (1) the promotion-focused (prevention-focused) consumers have higher WOM intentions for vague (specific) NPP; (2) curiosity (ou...

We demonstrate that decision contexts that involve sequential numerical changes over time can lead to suboptimal consumer choices in both incentivized and hypothetical studies. This is because for such changes, an earlier outcome has a cumulative effect on the final total, which consumers tend to ignore. We document the prevalence of consumers’ ten...

This study examines the impact of online review picture background and its interplay with product type and review features (e.g., star rating, texts) on consumers' purchase intention. Consumers make inferences about the reviewers' socioeconomic status (SES) from the background of online review pictures. Drawing on the social comparison literature,...

Purpose The purpose of this paper is to propose an overarching unifying theory where first-mover advantages are a conditional effect, not a main effect. By offering a closer look at how the firm, market and product characteristics influence the supply and demand of innovations, this research furthers our understanding of the advantages and disadvan...

We use micro level retail price data from convenience stores to study the link between 0-ending price points and price rigidity during a period of a runaway inflation, when the annual inflation rate was in the range of 60%–430%. Surprisingly, we find that more round prices are less likely to adjust, and when they do adjust, the average adjustments...

Across three laboratory studies, a biometric eye tracking and facial recognition experiment, and a secondary data analysis, we reveal the unique interaction of consumer numeracy and numerical processing fluency as a significant determinant of consumer response to 99-ending prices. We argue that less numerate individuals create mental analog represe...

Firms’ stigmatization due to deviation from social norms has received extensive attention in recent years. The increasing significance of the social norm requiring firms to protect the natural environment contributes to the emergence of pollution stigma over the heavily polluting firms. We apply the stigma theory to the National Specially Monitored...

The prior literature suggests that money offers symbolic or exchange values, thereby directly or indirectly motivating behaviours (i.e., money as a direct or an indirect behavioural incentive). Building on this distinction, the current research argues that the way consumers perceive the value of money (i.e., money‐view) affects their preferences fo...

We study the impact of consumers’ goal orientation on their preference between high-quality and low-priced products. Consistent with our theorizing, we find that US (Korean) consumers, who are more promotion (prevention) oriented, prefer high-quality (vs. low-priced) products because they assign more weight to quality in their choice. In addition,...

This research shows that visual density on a digital display influences perceived heaviness and the evaluation of a product. In a given space of a digital display, presenting visual elements with high (vs. low) visual density leads consumers to feel a product as heavier. When heaviness is considered as a negative product attribute (e.g., for a port...

Price promotions can be implemented by either discounting a product’s base price (e.g., offering a coupon) or reducing one of its surcharges (e.g., free shipping). This study examines how the two prevalent price promotion strategies affect online review ratings differently as a function of the temporal distance between purchase and review. Drawing...

This paper studies the effect of self-construal on consumers’ purchase intention of products that vary in visual novelty, its underlying mechanism and boundary conditions. Specifically, we propose that products with low (high) visual novelty should increase the purchase intention among interdependent (independent) consumers through decreased social...

As many multinationals set up subsidiaries in emerging markets, they face legitimacy pressures from the host countries. This pressure leads firms to engage in political corporate social responsibility (PCSR) activities. We distinguish two types of attributions of PCSR activities – public-serving and self-serving – and study how these two types of P...

Previous research suggests that when consumers encounter discrepant prices due to dynamic pricing, a social comparison evokes stronger unfairness perceptions than a temporal comparison does. In this paper, the authors show how this effect may vary depending on consumers’ self-construal. Two experiments find that while independent consumers perceive...

This paper examines the influence of self-construal on the effectiveness of warm/competent advertising appeals on consumer-brand identification and purchase intention, its underlying mechanism and boundary conditions. Specifically, we propose that a warm (competent) advertising appeal should enhance consumer-brand identification and purchase intent...

Consumers generally encounter a multitude of price discounts during a single visit to a retailers’ website, yet past research has predominantly examined price discounts in a singular manner. We examine how the influence of a price discount’s magnitude on consumer purchase intentions evolves during an online shopping trip. In doing so, we demonstrat...

The current research examines how goal orientation affects consumer preference among products with different prices. We argue that a less expensive product may have not only lower perceived quality but also greater perceived quality variability. This greater perceived variability provides the opportunity for optimistic, promotion‐oriented consumers...

How does market power affect consumer perceptions and purchase behavior? In the theoretically and pragmatically important context of price increases, we theorize that (i) consumer price fairness perceptions decline with market power when a price increase is due to costs; and (ii) this fairness difference arises due to greater perceptions of control...

Linking two forms of regulative pressures to different motivations for firms' strategic choices, we propose that stigmatized firms' effort to enhance their corporate social responsibility (CSR) reflects legitimacy considerations when faced with formal regulative pressures, but efficiency considerations when faced with informal regulative pressures....

Previous research demonstrates that stacked discounts increase retail revenue. For instance, a retailer should sell more products by offering "20% off, plus an extra 25% off” than by offering an economically equivalent single discount of "40% off.” We conduct multimethodology research to investigate a potential downside of offering stacked discount...

We document an asymmetry in the rigidity of 9-ending prices relative to non-9-ending prices. Consumers have difficulty noticing higher prices if they are 9-ending, or noticing price-increases if the new prices are 9-ending, because 9-endings are used as a signal for low prices. Price setters respond strategically to the consumer-heuristic by settin...

Drawing upon Kahneman and Tversky’s (1979) prospect theory, Thaler (1985) proposed the mental accounting principles, which Heath et al. (1995) applied to outcomes expressed in the percentage format. Following the emerging literature on how consumers process percentages (Chen et al. 2012; Chen and Rao 2007), we identify the existence of a computatio...

The upper echelons theory proposes that organizational actions may reflect the values, experiences, and personalities of powerful actors within an organization. Drawing upon this theory, this research investigates how the characteristics of chief executive officers (CEOs) affect corporate philanthropic giving (CPG) strategies in an emerging market....

According to the dual entitlement principle, consumers find it fair for firms to price asymmetrically to cost changes—that is, for firms to increase prices when costs increase but maintain prices when costs decrease. However, a meta-analysis reveals asymmetric pricing is less prevalent in collectivistic (vs. individualistic) countries (study 1). We...

Research summary : We study how two dimensions of reputation (i.e., generalized favorability and being known) and attribution of crisis responsibility affect firm value at the onset of a crisis. Analyzing 126 corporate crises befalling publicly listed firms in China from 2008 to 2014, we find that generalized favorability serves as a buffer, while...

Consumers’ purchase decisions typically involve two brands: the manufacturer brand (the “what brand to buy”) and the retailer brand (the “where to buy”). While extant research suggests that consumers’ product evaluation is affected by both, much less is known about jointly affect consumers’ preferences. To fill this gap, we build a simple reference...

Prices that end with 9, also known as psychological price points, are common, comprising about 70% of the retail prices. They are also more rigid than other prices. We take advantage of a natural experiment to document an emergence of a new price ending that has the same effects as 9-endings. In January 2014, the Israeli government passed a new reg...

Purchase decisions occasionally involve ratio calculations (e.g., calories per serving). When faced with decisions that involve information presented in such formats, consumers often ignore the convexity inherent in these calculations and rely on the more intuitive arithmetic mean rather than the correct harmonic mean in averaging ratios. In three...

When marketing strategy meets culture: The role of culture in product evaluations Abstract This research investigates how national culture interacts with marketing strategy to influence consumers' organic post-consumption satisfaction ratings of entertainment products rich in cultural content. Drawing upon a communication theory framework, we devel...

We take advantage of a natural experiment to document an emergence of a new price ending that has the same effects as 9-endings. In January 2014, the Israeli parliament has passed a law prohibiting the use of non 0-ending prices. We find that one year after 9-ending prices have disappeared, 90-ending prices acquired the same status as 9-ending pric...

A product's physical appearance is difficult to quantify, and the impact of product appearance on demand has rarely been studied using market data. The authors adopt a recently developed morphing technique to measure a product's aesthetic design and investigate its effect on consumer preference. Drawing upon categorization theory, the authors consi...

Sellers are often more interested in inducing buyers to make a choice—any choice—than in influencing which option they choose. For example, many retailers are more concerned about maximizing customer purchases within categories than influencing which brand is purchased in any particular category. Although this issue is important to researchers and...

In a series of studies, we document an advantage in sales volume for a bonus pack relative to an economically equivalent price discount. We provide evidence that consumers’ preferences for quantity changes (including bonus packs and quantity decreases) are due to their tendency toward neglecting the base value of percentages.

This paper applies the Lotka–Volterra model to investigate the competitive interactions among energy, environment, and economy (3Es) in the U.S. The proposed LV-COMSUD (Lotka–Volterra COmpetition Model for SUstainable Development) has satisfactory performance for model fitting and provides a useful multivariate framework to predict outcomes concern...

We identify a systematic bias due to consumers’ tendency to neglect convexity when summing or averaging ratios. We demonstrate the consequences of this bias in consumers’ judgment of travel time, fuel consumption and stock evaluation. We also show that the effects are not due to motivation or calculation difficulty.

Purpose - Although some literature exists on how consumers may interpret firm-generated signals about the unobservable quality of their product, there has been little effort to examine whether and how managers deploy signals about unobservable quality to compete. Design/methodology/approach - In this chapter, we address this issue by examining whet...

The interpretation of a percentage change often hinges on the base value to which it is attached. The authors identify a tendency among consumers to neglect base values when processing percentage change information and investigate the implications of such base value neglect for how consumers evaluate economically equivalent offers presented in perc...

People frequently overestimate the impact of an event when they imagine it, relative to when they actually experience it. This phenomenon, known as the impact bias, has been well established as an intrapersonal phenomenon. We extend it to the inherently interpersonal marketing setting involving buyer–seller dyads in which the two entities are bound...

The interpretation of a percentage change often hinges on the base value to which it is attached. The authors identify a tendency among consumers to neglect base values when processing percentage change information and investigate the implications of such base value neglect for how consumers evaluate economically equivalent offers presented in perc...

One common type of price points is 9-ending prices, also known as psychological prices (Kashyap 1995; Levy et al. 2011; Knotek 2010). In the current research, we use data from a lab experiment, a field study, and a large Midwestern US supermarket chain to study the rigidity of 9-ending prices. Our results demonstrate a hitherto undocumented asymmet...

There is evidence that 9-ending prices are more common and more rigid than other prices. We use data from three sources: a laboratory experiment, a field study, and a large US supermarket chain, to study the cognitive underpinning and the ensuing asymmetry in rigidity associated with 9-ending prices. We find that consumers use 9-endings as a signal...

We study the link between price points and price rigidity, using two datasets: weekly scanner data, and Internet data. We find that: “9” is the most frequent ending for the penny, dime, dollar and ten-dollar digits; the most common price changes are those that keep the price endings at “9”; 9-ending prices are less likely to change than non-9-endin...

The Thanksgiving-Christmas holiday period is a major sales period for US retailers. Due to higher store traffic, tasks, such as restocking shelves, handling customers' questions and inquiries, running cash registers, cleaning and bagging, become more urgent during holidays. As a result, the holiday-period opportunity cost of price adjustment may in...

People are frequently faced with making a new choice decision after a preferred option becomes unavailable. Prior research on the attraction effect has demonstrated how the introduction of an option into a choice set increases the share of one of the original options. The authors examine the related but previously unaddressed issue of whether the u...

We study the link between price points and price rigidity, using two datasets containing over 100 million observations. We find that (i) 9 is the most frequently used price-ending for the penny, dime, dollar and ten-dollar digits, (ii) 9-ending prices are between 24%-73% less likely to change in comparison to non-9-ending prices, (iii) the average...

Analyses of a large retail scanner price data set reveal a new and surprising regularity – small price increases occur more frequently than small price decreases for price changes of up to 10¢. That is, we find asymmetric price adjustment “in the small.” Furthermore, it turns out that inflation offers only a partial explanation for the finding. Ind...

When evaluating the net impact of a series of percentage changes, we predict that consumers may employ a "whole number" computational strategy that yields a systematic error in their calculation. We report on three studies conducted to examine this issue. In the first study we identify the computational error and demonstrate its consequences. In a...

We offer new evidence on the link between price points and price rigidity using two datasets. One is a large weekly transaction price dataset, covering 29 product categories over an eight-year period from a large U.S. supermarket chain. The other is from the Internet, and includes daily prices over a two-year period for 474 consumer electronic good...

Asymmetric pricing or asymmetric price adjustment is the phenomenon where prices rise more readily than they fall. We offer and provide empirical support for a new theory of asymmetric pricing in wholesale prices. Wholesale prices may adjust asymmetrically in the small but symmetrically in the large, when retailers face cost of price adjustment. Su...

There has been increasing interest in understanding how firms undertake non-price adjustment activities, especially in situations where prices may be rigid despite changes in market conditions. Using scanner price data for over 4,500 different food products from a large US supermarket chain, we document periods of rigidity in product additions and...

In this article, the authors examine cross-cultural variations in how people discount the future. Specifically, they predict that people from Western cultures are relatively less patient and therefore discount the future to a greater degree than do people from Eastern cultures, and thus Westerners value immediate consumption relatively more. Furthe...

Asymmetric pricing is the phenomenon where prices rise more readily than they fall. We articulate, and provide empirical support for, a theory of asymmetric pricing in wholesale prices. In particular, we show how wholesale prices may be asymmetric in the small but symmetric in the large, when retailers face costs of price adjustments. Such retailer...

Analyzing scanner price data that cover 27 product categories over an eight-year period from a large Mid-western supermarket chain, we uncover a surprising regularity in the data—small price increases occur more frequently than small price decreases. We find that this asymmetry holds for price changes of up to about 10 cents, on average. The asymme...

People are frequently exposed to potentially attractive events that are subsequently and unexpectedly reversed and to potentially painful events, which are also unexpectedly reversed. In the process of being returned to the initial asset position, does the sequence in which the positive and negative events occur matter? This issue of the combined e...