This dissertation focuses on contextual frames that influence how consumers perceive prices and how that in turn affects their product evaluations and consumption decisions. This research consists of three essays and attempts to further the understanding of contextual factors that affect how consumers perceive prices (essay 1) and how perceptions about prices influence product inferences (essay 2) and decision making (essay 3). While there is a substantial body of research on price framing and price perception, my research identifies and attempts to fill some important gaps in the existing research.

In my first essay, I introduce a new price framing effect – the upper limit framing effect. This essay shows that framing the upper limit of a price estimate as less than vs. not more than can result in systematic differences in perceptions regarding the underlying price. This research contributes to the existing price framing research, which primarily focuses on set prices, by investigating price estimates. It also makes important contributions to the temporal and monetary costs and semantic framing literatures and to the literature on negations.

In my second essay, I contribute to the existing perceived price-quality research that primarily concerns only the market prices. This essay shows that consumers over-apply the perceived price-quality heuristic when setting product prices by themselves (self-decided prices). Specifically, this research shows that contextual factors that affect self-decided prices in turn influence product inferences, with the relationship between contextual frame and product inferences being mediated by self-decided prices.

In my third essay, I contribute to the existing price framing research by showing that in the context of multiple price presentation, the price presentation order (ascending vs. descending) affects the perceived importance of price in the decision making – an effect I term as the price order effect – an effect that is explained by prospect-theory driven loss aversion. Specifically, this research shows that descending (vs. ascending) price presentation order results in significantly lower perceived importance of price in the decision making process which in turn influences subsequent consumption decisions.

In addition to the individual contributions of each essay, this dissertation makes an overall contribution to the price framing and price perception research by identifying new price framing effects and by furthering the understanding of how consumers perceive prices and how perceptions about price influences consumer decision making.