MGT 6400

Pricing Analytics and Revenue Management

Spring 2023
Reading Assignment 5
Due Date: February 14, 2023

Read the materials below in preparation for discussion in class. The questions are intended to guide
your reading and thoughts, but are not the only aspects that will be discussed in class.

1. Gerstner, E., “Do Higher Prices Signal Higher Quality?”, Journal of Marketing Research,
vol. 22, pp. 209–215, 1985.

2. Shiv, B., Carmon, Z., and Ariely, D., “Placebo Effects of Marketing Actions: Consumers May
Get What They Pay For”, Journal of Marketing Research, vol. 42, pp. 383–393, 2005.

3. Waber, R.L., Shiv, B., Carmon, Z., and Ariely, D., “Commercial Features of Placebo and
Therapeutic Efficacy”, Journal of the American Medical Association, vol. 299, nr. 9, pp. 1016–
1017, 2008.

4. Plassmann, H., O’Doherty, J., Shiv, B. and Rangel, A., “Marketing actions can modulate
neural representations of experienced pleasantness”, Proceedings of the National Academy of
Sciences, vol. 105, nr. 3, pp. 1050–1054, 2008.

Questions:

(1) What was the conclusion of Gerstner’s study?

(2) Describe the preliminary study and results of the placebo effects study.

(3) What were the shortcomings of the preliminary study?

(4) In Experiment 1, participants were partitioned into 5 groups. Describe the test conditions of
each of the 5 groups.

(5) Describe the results of Experiment 1.

(6) What conclusion seems clear from the results of Experiment 1?

(7) In Experiment 2, participants were partitioned into 5 groups. Describe the test conditions of
each of the 5 groups.

(8) Describe the results of Experiment 2.

(9) What conclusion can be drawn from Experiment 2 regarding the effect of drawing attention
to participants’ possible price–efficacy beliefs? What does it imply about the effect of price
on performance (the placebo effect) being conscious or unconscious?
MGT 6400 · Spring 2023 2

(10) A goal of Experiment 2 was to examine why a desirable placebo effect of the regular-priced
drink was not observed in Experiment 1. Did Experiment 2 achieve this goal, and if so, how?

(11) A goal of Experiment 2 was to examine whether participants paying the regular price might
have worked harder on the puzzle task to reduce the greater dissonance they might have
experienced as a result of the higher price they paid. Did Experiment 2 achieve this goal, and
if so, how?

(12) A goal of Experiment 2 was to examine whether, compared with participants in the regular-
price condition, those in the reduced-price condition concentrated less on the puzzle task as
a result of entertaining distracting thoughts about getting the drink at a lower price. Did
Experiment 2 achieve this goal, and if so, how?

(13) In Experiment 3, participants were partitioned into 5 groups. Describe the test conditions of
each of the 5 groups.

(14) Describe the results of Experiment 3.

(15) What do you think are the main lessons learned from the experiments?

(16) What do you think is the main lesson learned from the Waber et al. study?

(17) What do you think is the main lesson learned from the Plassmann et al. study?