The effect of framing with reference prices on willingness to pay

Behavioral economics stands out as an approach that aims to analyze human behavior more realistically, contrary to the assumptions of mainstream economics, and it is becoming increasingly popular in this regard. The aim of this study is to examine the effect of framing manipulation, which is one of the effective cognitive biases in the decision-making process of consumers in the context of behavioral economics, on willingness to pay (WTP) using reference prices, which also influence consumer decisions. In this context, the necessary data were collected through an online random survey. In the survey, participants were first shown a picture of a wireless headphone product taken from the page of an online shopping site and asked the amount they were willing to pay for this product. Then, the participants were divided into four different groups according to their birth month, and each group was presented with different framing situations with different reference prices and price ranges, and they were given the chance to revise the amount they were willing to pay. With this method, the effect of framing with different reference prices and price ranges on consumers' willingness to pay was evaluated. The results of the study indicate that individuals are affected by framing manipulation. While participants assigned to the low-priced framing condition experienced a significant decrease in their willingness to pay, contrary to expectations, the willingness to pay of participants assigned to the high-priced framing condition changed (decreased) not in proportion but in inverse proportion with the framing manipulation, but this decrease was not found to be significant according to the analysis conducted. Although there was a significant decrease in the willingness to pay of participants facing the framing condition with a low price range, no significant change was observed in the willingness to pay of participants assigned to the framing condition with high price ranges. These results show that framing manipulation with different reference prices leads to a change in individuals' willingness to pay for a product.