Effect of Price Estimate Precision on Pre- and Post-Outcome Satisfaction

Recent research on the precision of provided anchors suggests that consumers adjust less when a provided anchor is represented on a fine-grained scale than on a coarse scale (Janiszewski & Uy 2008; Zhang & Schwarz 2012). As a result, consumers are more confident that a product will deliver on its promises, and are therefore more likely to select a product, when the promise is conveyed in finegrained units (Zhang & Schwarz 2012). Zhang and Schwarz (2012) find that consumers prefer products whose attributes are expressed precisely (vs. imprecisely), and conclude that consumers have more confidence in outcomes when companies provide fine grained estimates, and that precision may therefore be beneficial to the firm. While Zhang and Schwarz focus on quantities of time, one estimate that consumers routinely receive from firms is a price estimate. We examine how the precision of a price estimate affects satisfaction with the estimate and beliefs about future outcomes. Further, we examine what happens when the actual price differs from the price estimate.