The purpose of this study was to gain a better understanding of tourists’ reactions towards differential pricing practices in the tourism industry. Specifically, guided by prospect theory, the study examined how valence framing, a price-framing tactic, affected price-related perceptions (i.e., perceived price, perceived fairness and perceived value). Moreover, this study investigated the moderating roles of four factors (price magnitude, composite price, familiarity with price practices, and involvement) in the valence framing effects.
Based on prospect theory, a conceptual framework was proposed for this study. A hypothetical scenario-based experiment approach was utilized to examine the proposed model. Three independent variables (i.e., valence framing, price magnitude, and composite price) were manipulated in scenarios, and familiarity and involvement were measured as covariates. A 2 (valence framing: positive framing vs. negative framing) by 2 (price magnitude: high vs. low) by 2 (composite price: high vs. low) experiment was conducted online. Participants were randomly assigned to one of the eight scenarios and a total of 351 participants were recruited from the Amazon’s Mechanical Turk.
The results revealed a significant main effect of valence framing on perceived fairness, a significant interaction effect on perceived price between valence framing and price magnitude, and a significant interaction effect on perceived value between valence framing and price magnitude. Although no interaction effect was found between valence framing and familiarity and involvement, main effects of familiarity and involvement were found on perceived price, perceived fairness and perceived quality. Results provide both theoretical and practical implications for public tourism organizations in terms of differential pricing strategies based on visitors’ residence
