Anchoring Effect and Influence of Knowledge on Consumers Willingness to Pay for Organic Food Online: An Online Experiment on Chinese Consumers of Organic Food

Abstract

This study investigates how the anchoring effect affects peoples willingness to pay for organic food in an online purchasing environment.The aim of this study is to find out whether anchoring has an impact and how it affects peoples value perception of online organic food and, thus, their trust in and willingness to pay for organic food. Moreover, this study also aims to find out how knowledge of external reference prices of the same type of organic food provided by other online sellers moderates peoples willingness to pay when given a price anchor. This study uses an online survey to perform the experiment and uses quantitative analysis methods to validate the results. The study finds that anchoring does have an impact on peoples willingness to pay for organic food online, even when people face an exaggerated price provided by the online seller. Moreover, knowledge of external prices moderates peoples willingness to pay. People tend to adjust their willingness to pay towards the average level of external prices.