8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
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Buying while expecting to sell The economic psychology of online resale
Hsunchi Chu a1 Shuling Liao b
a Department of Global Marketing and Logistics MingDao University 369 Wen-Hua Rd Peetow ChangHua 52345 Taiwanb Department of International Business Yuan Ze University 135 Fareast Rd Chung-Li 32002 Tao-Yuan Taiwan
a b s t r a c ta r t i c l e i n f o
Article history
Received 1 August 2008
Received in revised form 1 January 2009
Accepted 1 March 2009
Keywords
Consumer online resale
C2C e-commerce
Mental accounting
Resale reference price
Consumer online resale is becoming increasingly common for transactions of secondhand goods However
when accompanied by a preconceived intention to resell a product after using it the initial consumer
purchasing decision for self-use is complicated by the estimated resale value of that good We applied the
principles of mental accounting to develop and evaluate a new concept that may in 1047298uence consumer resale
and purchase intention external resale reference price (ERRP) The study examines how online consumer
sellers economic psychology of buying affected their expectation of future online resale outcome The results
indicate that (1) consumers awareness of future online resale potential can in1047298uence their purchasing
decisions (2) ERRP which is mediated by the estimated resale return can increase purchase intention and
(3) the effects of ERRP on purchase intention are moderated by online resale likelihood but are minimal
when consumers are aware that resale possibility is extremely low
copy 2009 Elsevier Inc All rights reserved
1 Introduction
Imagine the following scenario You 1047297nd a high-quality premium
brand jacket with a style that you love you want to buy it and its thelast one in the store However you decide against it because the price
(US$800) far exceeds your budget and you fear that you might regret
buying it later This situation is not dif 1047297cult to imagine and may even
sound familiar But what if a business-savvy friend or colleague
assured you that the jacket could be resold online for about US$700
even after you owned it for some time Would this information make
youfeelmorecomfortable andthusmorelikely to purchasethe jacket
Consumer behavior studies have long centered on purchasing
behavior How consumers resell goods online remains relatively less
known and has mostly been investigated in the context of face-to-
face interpersonal transactions such as garage sales and 1047298ea markets
(Belk 1988 Herrmann 2006 Herrmann and Soiffer 1984 Sherry
1990) However in this era of e-commerce an increasing number
of consumers not only purchase but also resell merchandise via
consumer-to-consumer (C2C) Web sites and thus it is important to
gain a better understanding of this rapidly growing sector of the
market This type of consumer resale behavior given its initial self-
use acquisition purpose differs from the behavior of retailers and
therefore requires novel research (Chu and Liao 2007) Indeed this
research gap in consumer online resale has not even been 1047297lled by
online auction studies which have mainly addressed online buying
behavior and auction mechanisms such as bidding strategies andWeb assurance tools Therefore we investigated consumer online
resale behavior by assessing the pivotal role of C2C Web sites as a
channel for the sale of secondhand goods and their in1047298uence on
consumers purchase decisions
Theconcept of reference price is well established and continuesto
receive attention in the marketing and consumer behavior literature
(Chandrashekaran and Grewal 2006 Monroe and Lee 1999 Moon
and Voss 2009 Rajendran and Tellis 1994 Winer 1986) An internal
reference price (IRP) can be de1047297ned as ldquoan internal price to which
consumers compare observed pricesrdquo (Winer 1989 p 35) Scholars
commonly agree that consumers possess an internal reference which
may be based on previous experience (Lattin and Bucklin 1989
Winer 1989) external information such as advised prices (Chandra-
shekaran and Grewal 2006 Urbany et al 1988) the reserve price of
an online auction (Kamins et al 2004) andor contextual effects
(Lichtenstein and Bearden 1988) Empirical research has proved that
consumersbehave as if they have a reference price to which they refer
in their decision process (Kalyanaram and Winer 1995) and that
retailers can improve consumers perceptions of IRP by providing an
external reference price (ERP) When making decisions under
ambiguous circumstances consumers are prone to using externally
available information as anchors to adjust their estimates (Einhorn
and Hogarth 1986 Tversky and Kahneman 1974) The adjustments
move in the direction of the anchor and the degree of adjustment
depends on theextent to which theexternalanchor differs from initial
estimates (Chandrashekaran and Grewal 2006)
Journal of Business Research 63 (2010) 1073ndash1078
We thank our two anonymous reviewers and JBR editor for their insightful
comments This work was supported in part by the National Science Council under
Grants No NSC97-2410-H-451-008 and No NSC97-2410-H-155-023
Corresponding author Tel +886 3 463880x2684
E-mail addresses chcmduedutw (H Chu) ibslliaosaturnyzuedutw (S Liao)1 Tel +886 4 8876660x7623
0148-2963$ ndash see front matter copy 2009 Elsevier Inc All rights reserved
doi101016jjbusres200903023
Contents lists available at ScienceDirect
Journal of Business Research
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
httpslidepdfcomreaderfullbuying-while-expecting-to-sell-the-economic-psychology-of-online-resale 26
To study consumer online resale behavior and its in1047298uence on
purchase decisions we broadened this concept of reference price
which applies only to the buying phase to include reference prices
that are used while making online resale decisions That is we
developed the concept of ldquoresale reference pricerdquo by de1047297ning an
ldquointernal resale reference pricerdquo (IRRP) as the resale price consumers
accept based on subjective estimations and the concept of ldquoexternal
resale reference pricerdquo (ERRP) as the potential market price of resold
items that sellers can infer based on market information We proposethat resale reference price is an important factor that in1047298uences
consumer resale behavior and purchase decisions because it relates
directly to the cost and bene1047297t of possessing a product
Given that the idea of ldquothe consumer as resellerrdquo is relatively new
we applied theconcept of mental accounting (Thaler 1985) to explain
and investigate the following (1) how consumers might act with
respect to buying when they are aware or unaware of future online
resale opportunity (2) how consumer purchase intention changes as
one compares the cost of an item and future resale returns against
ERRP information and (3) how consumer purchase intention may be
in1047298uenced by the interaction between ERRP and the expected likeli-
hood of resale
2 Theoretical foundation and hypotheses
Drawing on prospect theory (Kahneman and Tversky 1979 1983)
Thaler (1985) developed ldquomental accountingrdquo principles to explain
how people maximize the utility of a decision via a process of coding
categorizing and evaluating multiple events related to that decision
Given the shape of the value function it is better to segregate
ldquomultiple gainsrdquo and ldquomixed lossesrdquo and to integrate ldquomultiple lossesrdquo
and ldquomixed gainsrdquo (see Thaler 1980 1985) All of these principles
with the possible exception of the rule of integration of multiple
losses are generally robust (Kim 2006 Thaler 1999) and are sup-
ported by many empirical tests (Gourville and Soman 1998 Heath
et al 1995 Linville and Fischer 1991 Thaler and Johnson 1990)
Mental accounting assumes that people practice hedonic editing
that is multiple events are determined by whether they are mentally
integrated or separated before they are subjectively evaluated tomake individuals happier (Thaler 1985) Under this assumption
consumers may set budgets for categories of expenses and use
resources differently depending on how they are mentally ldquolabeledrdquo
(Heath and Soll 1996 Thaler 1980 1985) They may even create
ldquomental accountsrdquo when making a purchase and practice ldquomental
depreciationrdquo to spread the cost of an item implicitly over time or use
By adding an assessment of consumption to their subjective account
they can also align costs and bene1047297ts to make an expense seem less
like a ldquolossrdquo (Heath and Fennema 1996) In other words for goods
that are acquired and used consumers may subjectively depreciate
the initial purchase price and create a mental book value for the
product as it isused(Heath and Fennema 1996) When a replacement
purchase is made the buyer also ldquopaysrdquo a subjective price that is equal
to a write-off of this remaining book value (Okada 2001 Purohit1995)
In a consumer purchasing and consumption model payments for
products can be viewed as losses whereas the bene1047297ts derived from
continuously using the products can be considered gains (Prelec and
Loewenstein 1998 Sha1047297r and Thaler 2006 Thaler 1999) Thus let X
be the bene1047297t of possessing product A v( X ) the value of possessing
product A in the value function of the Prospect Theory Y the price of
product A v(Y ) the value of saving the cash (not purchasing Y )
equivalent to the cost of product Y Z the resale reference price of
product A and v( Z ) the value of reselling product A online at a price
of Z Then when v( X )minusv(Y )b0 consumerswill have a lower intention
to purchase that product because there is a net loss upon purchase
(Okada 2001) However the online resale return of a resalable item
v( Z ) could be seen as a gain which if high enough may cover the net
loss associated with the purchase If so then v( X )minusv(Y )) + v( Z )N0
Because individuals are loss averse (Kahneman and Tversky 1979
Tversky and Kahneman 1991) they are typically much more satis1047297ed
when they can integrate a loss (v( X )minusv(Y )) with an equivalent or
larger gain (v( Z )) (Thaler 1985 Linville and Fischer 1991) By
combining both purchase and resale assessments a buyer has an
opportunity to eliminate the loss with the perceived future gain thus
avoiding the pain of experiencing the loss on its own ( Heath and
Fennema 1996)Under the above circumstances it may be easier to stimulate the
desire to buy a product among consumers with high online resale
awareness than among consumers with low online resale awareness
As high-awareness consumers consider the future disposable cash
they will receive from the future online resale they may feel more
comfortable 1047297nancially which may ease their sensitivity toward the
price of the current purchase and therefore enhance their purchase
intention In this way a resaleplan makes more brands and individual
products affordable
H1 Prior to a purchase consumers who are highly aware of the
possibility of reselling a good online after acquiring it has a greater
intentionto buythe good than thosewith lowonlineresale awareness
Consumers are concerned about the mental book value of areusable item and are able to estimate it mentally (Okada 2001
Purohit 1995) Therefore the price at which they can resell a
possession should be an important factor affecting their initial
purchase decision for that possession assuming that resale awareness
is formed prior to the purchase Even then only when the resale price
is high enough can individuals practice mixed gain by hiding a small
loss into the larger gain In the value function v( X )minusv(Y ) + v( Z ) the
higher the ERRP the more return or value the consumer can expect to
receive v( Z ) or the higher the net gain from integrating the purchase
cost and online resale return On the other hand when a consumer
resells a possession the subjective book value of the resold item will
most likely become the IRRP of that item which is a key factor to
consider when evaluating whether an ERRP is reasonable and
acceptable A higher resale price indicates a lower depreciation ratewhich drives the ERRP higher than the IRRP thus making consumers
more satis1047297ed with the product
H2 Among consumers with high online resale awareness the higher
the ERRP of a good the greater their intention to purchase the good
Building on Tversky and Kahneman (1981) who found that
individuals may act differently toward the same scenario described in
two different ways we propose that a consumers purchase intention
can be enhanced in at least two different ways by either a positive or
negative framing condition In a positive framing condition con-
sumers focus on the resale return interpreting the situation as an
increase in bene1047297t Because consumers suffer the pain of paying
when purchasing a good (Prelec and Loewenstein 1998 Sha1047297r and
Thaler 2006 Thaler 1999) they are eager to overcome that pain bydeveloping positive justi1047297cation for making the purchase (Kivetz
1999 Sha1047297r et al 1993 Strahilevitz and Myers 1998) One way to
maximum value of consumption is to create a mental account of
estimated resale return and add the expected return into it to cover
the loss of purchase
Sha1047297r and Thaler (2006) investigated how consumption may be
mentally separated or decoupled temporally (Gourville and Soman
1998 Prelec and Loewenstein 1998) from purchase They found that
such goods are assessed using multiple frames and alternative
accounting schemes and are often mentally coded as incurring no
cost or even as savings The authors argued that the value of items can
change for a variety of reasons including depreciation appreciation
market valuation the cost of money and personal taste Based on
these 1047297ndings we propose that when consumers acknowledge a
1074 H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
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feasible resale plan prior to a purchase they will not conceptually
spread the total cost and depreciate its value evenly over its period of
consumption as they would for a conventional purchase but rather
will expect a potentially high return upon resale Under this scenario
a higher ERRP (ie higher secondary price and thus higher estimated
resale return) leads to a greater v( Z ) and is thus a more persuasive
reason to make the initial purchase Therefore we propose the fol-
lowing hypothesis to further examine the purchasing psychology of
consumersH3 Estimated resale return has a mediatingeffect on the relationship
between ERRP and purchase intention Speci1047297cally an increase in
ERRP will lead to an increase in estimated resale return which in turn
increases purchase intention
In contrast in a negative framing condition consumers may men-
tally deduct an items estimated resale value from the actual initial
payment interpreting the situation as a decrease in payment In this
way consumers feel more comfortable with the deal by pretending
that the item cost less than it did at that point in time The process of
consumption may also affect a consumers mental accounting For
instance transportation costs search costs or waiting time could
possibly increase the perceived payment while an unexpected
discount in stores (Ha et al 2006) could decrease the accountA higher ERRP indicates that an item has a higher residual value
after usage This value can be considered another form of cash
possessed by a consumer with a resalableitemthat isa portion of the
payment is considered inherent to or ldquostored valuerdquo of the merchan-
dise thus subjectively decreasing the perceived purchase payment
This can be illustrated by the value function v( X )minusv(Y minus Z ) Indeed
given thesame bene1047297ts v( X ) consumers prefer a higher Z and a lower
cost v(Y minus Z ) therefore a higher ERRP increases purchase intention
H4 The perceived purchase payment has a mediating effect on the
relationship between ERRP and purchase intention Speci1047297cally an
increase in ERRP will lead to a decrease in the perceived purchase
price which in turn increases purchase intention
Several studies report that reference cues as numbers whetherrelated (Chandrashekaran and Grewal 2006 Urbany et al 1988) or
unrelated (Nunes and Boatwright 2004 Tversky and Kahneman
1974) to a given topic can have an anchoring effect (Tversky and
Kahneman 1974) on an individuals decision The effect refers to the
adjustment of ones assessment higher or lower based on the
previously presented external information or ldquoanchorrdquo For instance
consumer internal price perception at the time of purchase can be
in1047298uenced by providing an external price for that same item
(Chandrashekaran and Grewal 2006) or even a different item
(Nunes and Boatwright 2004) In these studies the external and
internal prices are both directly related to the payment to purchase
a good which thus places them at the same conceptual level for
comparison
However the essence of resale reference price (ERRP and IRRP) isquite different First it relates directly to resale instead of purchase
activity and refers to the money consumers will receive after selling a
possession rather than the price they should pay Thus resale refer-
ence price is on a different conceptual level and cannot be compared
directly to reference price of purchase Further the items being resold
are typically usedsecondhand which further complicates the
calculation of resale price IRP derives mainly from previous purchase
experience (Lattin and Bucklin 1989 Winer 1989) while IRRP is
in1047298uenced by product usage mental depreciation (Okada 2001
Purohit 1995) and personal online resale skills and experience (Chu
and Liao 2008) in addition to previous purchase experience
Another difference between traditional reference prices and our
proposed resale reference prices is the timing Resale reference price
occurs after an item has been acquired while the reference price of
purchase occurs before the item is acquired The temporal gap makes
the in1047298uence of resale reference price on purchase decisions differ
from the in1047298uence of the traditional reference price because more risk
and uncertainty are involved For instance consumers may largely
discount the resale values because the online resale will happen
farther in the future and the quality of the product or market situation
at that time is uncertain Accordingly we contended that ERRPs
related directly to the bene1047297ts of acquiring a product could be seen as
one of the most important product attributes when making purchaseevaluations Therefore the effect of ERRPs on purchase intention
rather than simply being an external anchoring was achieved through
careful mental deliberation about the products bene1047297ts and costs In
other words a high ERRP will not generate the same in1047298uence on a
consumers purchase intentiononce he or she is aware that thechance
of making a successful online resale is very low
H5a The ERRP of a good will not in1047298uence purchase intention when
consumers are aware that the resale possibility is extremely low
H5b The higher a goods ERRP the greater its in1047298uence on purchase
intention when consumers are aware that the resale possibility is
extremely high
3 Study 1
31 Method
We used a between-subjects design to examine the hypotheses
and chose a mobile phone for the experiment because it is the best-
selling item in Taiwans online auctions (Yam Survey 2006) We set
the initial tag price for the newest most traded item among mobile
phones at NT$10000 (approximately US$312) and the ERRP at three
levels NT$3000 (US$93) NT$6000 (US$187) and NT$9000 (US$281)
to manipulate low medium and high prices respectively We select-
ed these pricesbecause they correspond to the average IRRP reported
under both optimistic and pessimistic conditions by 80 members of
the online community Youthwant (wwwyouthwantcomtw) in our
online pilot study The ERRP of NT$9000 (high ERRP condition) isabove the average optimistic resale price (NT$7311) while NT$6000
(medium ERRP condition) is between the average optimistic resale
and pessimistic resale price (NT$4392) and NT$3000 (low ERRP
condition) is below the average pessimistic resale price
The formal online questionnaire consisted of four sections The
1047297rst section provided a product description and a photo followed by a
priming manipulation of future online resale possibility (low vs high)
Section 2 measured the respondents IRRPs of the target product
at three levels (highest average and lowest) and provided three
manipulation check questions on the stimuli provided in Section 1
Section 3 described the hypothetical buying price of the target
product and the ERRP for manipulation Section 4 presented a
manipulation check item about the ERRP information in the previous
section and measured the respondents intention to buy the targetproduct the expected future resale return their subjective purchase
payment after con1047297guring purchase cost and estimated resale return
The independent variables for each description were online resale
awareness (low and high) and ERRP (low medium high) with the
ERRP manipulated only for the high-awareness groups This resulted
in four versions of the questionnaire for the main study in which the
subjects were assigned to one low-awareness group and three high-
awareness groups with three ERRP levels set individually
We also conducted the main experiment on Youthwant The
sample consisted of 477 participants with an average age of 25 years
Of these 63 were high school students 199 were undergraduate or
graduate college students and 215 were not students Of the 477
participants 270 had online resale experience and 207 did not All of
the participants were registered members of Youthwant They were
1075H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
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compensated fortheir participation in thestudy with 30 virtual points
(approximately NT$30) which they could spend on gifts or for Web
site services The research was limited to C2C online auctions but
individuals who had never resold anything via an online auction were
allowed to participate The wording we used to describe an intention
to purchase would be clear to anyone with a basic understanding of
C2C online auctions To improve reliability each subject was allowed
to complete only one questionnaire using the Web site system
controlAll participants read a description of a purchase decision about a
new mobile phone costing NT$10000 The low-awareness group read
a scenario indicating that the possibility of reselling the new mobile
phone online after acquiring it was low The high-awareness groups
read one of three different scenarios all of which indicated that the
possibility of reselling the new mobile phone was high Each scenario
in the high-awareness groups offered a different ERRP as described
previously Finally we asked the participants in all four groups to rate
their intention to purchase the new mobile phone using a 7-point
Likert scale In addition we asked the high-awareness groups to
estimate the online resale return and the perceived purchase
payment The results of the manipulation check to con1047297rm if the
provided scenarios of online resale awareness and ERRPs were
well received showed that all of the manipulations were enacted as
intended
32 Results
Table 1 lists the descriptive statistics of dependent variables for all
experimental groups A t -test conducted on intention to purchase
yielded a signi1047297cant difference between the low- and high-awareness
groups (t =minus451 pb 001) This result supports H1 that consumers
with high online resale awareness will have a greater intent to
purchase
A one-way ANOVA conducted on intention to purchase among
the three high-awareness groups revealed signi1047297cant between-
group differences (F =162 p b 001) A Scheffe post-hoc test further
demonstrated signi1047297cant mean differences among the groups (HighN
MediumNLow psb 05) Thus as predicted H2 is supported by theresults among consumers who have high online resale awareness for
a particular product a higher ERRP led to a greater intent to purchase
To examine H3 we performed a one-way ANOVA on the estimated
resale return ratings of the three high-awareness groups There was a
signi1047297cant between-group effect (F =167631 pb 001) which we
con1047297rmed by signi1047297cant Scheffe post-hoc tests (HighNMediumNLow
psb 001) Hence among consumers with high online resale aware-
ness the higher the ERRP the higher the estimated resale return
Next we conducted a simple regression analysis to test the rela-
tionship between estimated resale return and intention to purchase
As expected purchase intention was positively related to estimated
resale return ( β =329 pb 001) To test the mediating effect of esti-
mated resale return we followed a three-step procedure suggestedby
Baron and Kenny (1986) A mediating effect can be assumed if the
following criteria are met (1) there is a signi1047297cant relationship
between the independent (ERRPs) and dependent (intention to
purchase) variables (2) there is a signi1047297cant relationship between the
independent variable (ERRPs) and the mediator (estimated resale
return) and (3) the effect of the independent variable (ERRPs) on the
dependent variable (intention to purchase) is signi1047297
cantly reducedafter the mediator (estimated resale return) is added to the equation
The regression analyses demonstrated a complete mediating effect of
estimated resale return as (1) ERRP had a signi1047297cantly positive effect
on purchase intention ( β =289 pb 001) (2) estimated resale return
had a signi1047297cantly positive effect on purchase intention ( β =329
pb 001) and (3) β (117) for ERRP in the multiple regression model
was no longer signi1047297cant ( p =094N 05) whereas β (247) for the
estimated resale return remained signi1047297cant ( pb 001) In addition a
Sobel test was signi1047297cant (Sobel test statistic=268 pb 01) suggest-
ing that estimated resale return mediated the main effect of ERRP on
purchase intention Thus the statistical evidence supports H3
A one-way ANOVA performed to test H4 revealed a signi1047297cant
between-group effect on perceived purchase payment among the
three high-awareness groups (F =10322 p b 001) Scheffe post-hoc
tests (HighbMediumbLow psb 001) con1047297rmed this result Accord-
ingly among consumers with high online resale awareness the
higherthe ERRP the lower the perceived purchase payment Next we
calculated a simple regression to determine the relationship between
perceived purchase payment and intention to purchase As expected
there was a negative relationship between purchase intention and
perceived purchase payment ( β =minus 201 pb 001) indicating that
the higher the perceived purchase payment the lower the intention
to buy We applied the same three-step procedure (Baron and
Kenny 1986) described for H3 to test the mediating effect of
perceived purchase payment for H4 The results showed no signi1047297cant
mediating effect of perceived purchase payment between ERRP and
purchase intention as β for ERRP in the multiple regression model
remained signi1047297cant ( β =26 pb 001) after perceived purchase
payment was included in the equation whereas β for perceived pur-chase payment was insigni1047297cant ( β =minus 05 p =41N 05) Thus H4 is
only partially supported because perceived purchase payment did not
mediate the main effect of ERRP on purchase intention
Comparing this insigni1047297cant result (H4) to the substantiated
mediating effect of estimated resale return (H3) payment perception
did not in1047298uence the relationship between ERRP and purchase
intention as much as did estimated resale return during consumers
subjective evaluations of online resale This implies that consumers
1047297nd it dif 1047297cult to deduce the net purchase payment based on ERRP
cues That is they feel a strong loss of money upon making a payment
which cannot be resolved by expected return in the future In other
words they do not equate the resale value of possessions with cash
Therefore the increased purchase intention is derived mainly by a
higher net gain perception based on estimated resale return This mayexplain why there was no mediating effect of perceived purchase
payment
4 Study 2
41 Method
We conducted Study 2 to con1047297rm that the effect of ERRPs on
consumers intention to purchase did not derive from an anchoring
effect but rather a mental accounting effect For the experiment we
used a 2 (extremely low resale possibility vs extremely high resale
possibility)times2 (low vs high ERRP) between-subjects design admin-
istered on the Youthwant online community We replicated the pro-
cedure of Study 1 but manipulated four different purchase scenarios
Table 1Descriptive statistics of Study 1
Numbers of
participants
Intention to
purchase
Estimated
resale return
Perceived
payment
Mean S D Mean S D Mean S D
Low online
resale
awareness
120 331 133 NA
High online
resale
awareness
357 401 153 5 47713 274868 4610 94 349356
Low ERRP 118 3 46 153 3 16525 130387 715847 156081
Medium
ERRP
119 403 129 5 37552 150885 4741 03 363620
High ERRP 120 4 54 158 785123 2 77116 1 97686 2 74907
Abbreviations ERRP external resale reference price SD standard deviation
1076 H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
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to test interaction effects We organized the questionnaire as follows
After reading the same online purchase scenarios for a cell phone we
informed participants that the chance to resell the cell phone online
successfully was either ldquoextremely lowrdquo or ldquoextremely highrdquo The
questionnaire emphasized this wording to ensure that participants
perceived the manipulation of resale possibility strongly and clearly
To con1047297rm we performed manipulation checks to ask participants to
assess their perception using a 7-point Likert scale of the chance to
resell the target item successfully with 1 being extremely low and 7
being extremely high The group that showed high resale possibility
had a higher perception of resale likelihood than the low-possibility
group (M = 648 vs 166 t =minus797 pb 001) Following this exercise
we gave these participants purchase scenarios for a low ERRP (NT
$3000) and a high ERRP (NT$9000) respectively as a second test of
manipulating factors Finally we queried each groups intention to
purchase the cell phone In Study 2 the sample consisted of 440
participants with an average age of 24 years There were 110 subjects
in each group Of the total 54 were high school students 189 were
undergraduate or graduate college students and 197 were not
students Among the 440 participants 287 had online resale experi-
ence and 153 did not All of the participants were registered members
of Youthwant and had not participated in previous experiments
42 Results
Table 2 lists the descriptive statistics of dependent variables for all
experiment groups and Table 3 shows the results of a two-way
ANOVA with resale possibility and resale price as the independent
variables and intention to purchase as the dependent variable There
were signi1047297cant interaction effects (F =136 pb 001) which implies
that the effect of ERRP on purchase intention may be moderated by
perceived resale possibility
In support of H5a participants with a perception of extremely low
resale possibility showed the same level of purchase intention under
both low and high ERRP situations (t =088 p =038) And in support
of H5b participants who perceived an extremely high resalepossibility showed a higher purchase intention when stimulated
with a high ERRP (t =5485 pb 001) See Fig 1
In Study 2 ERRPs did not have a signi1047297cant effect on purchase
intention when consumers did not see a future resale bene1047297t for the
item In other words consumers are in1047298uenced by ERRPs only when
resale feasibility is high The results also indicate that a simple
anchoringeffect did not cause theincreased purchase intentionwith a
higher ERRP in Study 1 if it had it would have been present and thus
would have in1047298uenced purchase intention when the resale possibility
was extremely low in Study 2 This conclusion is reinforced by the
results indicating that the mean purchase intention in the extremely
low resale possibility groups of Study 2 was signi1047297cantly lower than
that of the low resale awareness group in Study 1 (M =264 vs 331
t =minus468 pb 001) This demonstrates that consumers are concerned
about the resale result and may feel disappointed about the failure of
an expected resale once their resale awareness is triggered
5 Discussion
Our results indicate that online resale awareness can signi1047297cantly
in1047298uence a consumers buying intentionprior to a purchase Informing
consumers about their future chances to resell a good prompts theirawareness and expectations for online resale which in turn enhances
their intentionto purchase thegood Therefore we suggest that online
resale awareness and expectations are important factors affecting both
purchasing and reselling behaviors
In addition once consumers have developed online resale aware-
ness their intention to purchase a good is affected by the ERRP level
The higher the perceived future resale price the more willing
consumers are to buy an item This implies that product preference
is determined not only by personal taste and product attributes but
also by the chances and outcome of the future resale Further we
discovered that aside from listing the acquisition price of a good
payment perception and estimated resale return in particular had the
greatest in1047298uence on purchase intention and resale plans These two
constructs are closely associated with the concepts of mental depre-ciation (Heath and Fennema 1996) and mental book value (Okada
2001) To be more speci1047297c a high ERRP signals a lower depreciation
rate a higherresale return anda lower acquisition cost of a good thus
making the good more desirable to purchase
Finally the mediating effect of estimated resale return between
ERRP and purchase intention suggests that consumers integrate
mixed gains (Thaler 1985 1999) by combining events subjectively to
boost perceived utility or to justify their purchase (Kivetz 1999
Sha1047297r et al 1993 Strahilevitz and Myers 1998) The present study
did not require participants to have online resale experience which
implies that consumers in general even those without such ex-
perience or plans to resell possessions online prefer products with a
higher resale price This indicates that a higher resale price may be an
important product attribute for consumers with resale awareness
Table 2
Descriptive statistics of Study 2
Resale possibility Resale reference
price
Numbers of
participants
Intention to
purchase
Mean S D
Extremely low online
resale possibility
Low ERRP 110 256 132
High ERRP 110 271 113
Total 220 264 123
Extremely high online
resale possibility
Low ERRP 110 343 151
High ERRP 110 454 149
Total 220 398 160
Total Low ERRP 220 300 148
High ERRP 220 362 160
Total 440 331 157
Abbreviations ERRP external resale reference price SD standard deviation
Table 3
Summary of ANOVA test of Study 2
Source Mean square F
Resale possibility 199127 106134
ERRP 43282 23069
Resale possibilityERRP 25536 13611
Abbreviations ERRP external resale reference price
Note Signi1047297cant at pb0001
Note
Signi1047297cant at pb
0001
Fig 1 Interaction effects of resale possibility and externalresale reference price(ERRP)
1077H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
httpslidepdfcomreaderfullbuying-while-expecting-to-sell-the-economic-psychology-of-online-resale 66
Finally the results of Study 2 con1047297rm that a mental evaluation process
about the bene1047297ts and costs of acquiring a product and not an
anchoring effect causes the observed effects of ERRPs and that the
failure of an expected resale may cause discon1047297rmation and thus
decrease purchase intention
6 Managerial implications
Our results imply that consumers who intend to resell online mayperceive lower purchase risk than those who intend only to buy They
are also more willing to purchase goods that they initially hesitated to
buy when they are aware that they can resell the goods they 1047297nd
unsatisfactory We suggest that marketers should consider the
changes brought about by the online secondary market in particular
the potential link between a new product and these secondary
markets (Purohit 1992 Zhao and Jagpal 2006) Whereas the
speculated cannibalization effect predicts that the C2C online auction
market may steal some sales from retailers the actions of online
auction sites that resell goods consumers do not want may actually
lead to increased sales of new products by retailers ( Paden and Stell
2005) Thus marketers should look favorably upon and implement
strategies to exploit secondary markets
7 Limitations and future research
Thepresent study has some limitations First all of the participants
were from the same online community in Taiwan More online and
of 1047298ine participants even persons from traditional secondary markets
should be tested to gain a deeper understanding of consumer pur-
chasing and resale behavior In addition we conducted the study in a
Chinese context and thus additional research is needed to investigate
consumer online resale behavior in other contexts As Chu and Liao
(2008) noted the product personal characteristics of the consumer
and situational factors can all in1047298uence consumer resale decisions
Thus future studies should include a wider range of products with
different characteristics participants with different levels of resale
experience and a variety of decision situations to further generalize
and con1047297rm the robustness of our 1047297ndings Finally ERRP is an im-portant factor that affects consumer online resale decisions Increas-
ing the number of different ERRP levels and enabling comparisons
among them could provide a more complete understanding of con-
sumer resale behavior The relationship between IRRPs and ERRPs as
well as how consumers determine resale prices is another potential
topic for further research
References
Baron RM Kenny DA The moderator-mediator variable distinction in social psycho-logical research conceptual strategic and statistical considerations J Pers SocPsychol 198651(6)1173ndash82
Belk RW Possessions and the extended self J Consum Res 198815(2)130ndash68Chandrashekaran R Grewal D Anchoring effects of advertised reference price and sale
price themoderatingrole of saving presentationformat J Bus Res200659(10ndash11)
1063ndash71Chu H Liao S Exploring consumer resale behavior in C2C online auctions taxonomy
and in1047298uences on consumer decisions Acad Mark Sci Rev 200711(3)1-27Chu H Liao S Toward a conceptual model of consumer online resale behavior an
exploratory study in Taiwan J Internet Commerce 20087(2)220ndash52Einhorn H Hogarth R Decision making under ambiguity J Bus 198659(4)225 ndash50Gourville JT Soman D Payment depreciation the behavioral effects of temporally
separating payments from consumption J Consum Res 199825(2)160ndash74Ha HH Hyun JS Pae JH Consumers mental accounting in response to unexpected price
savings at the point of sale Mark Intell Plann 200624(4)406ndash16
Heath C Fennema MG Mental depreciation and marginal decision making OrganBehav Hum Decis Process 199668(2)95-108
Heath C Soll JB Mental budgeting and consumer decisions J Consum Res 199623(1)40ndash52
Heath T Chatterjee S France K Mental accounting and changes in price the framedependence of reference dependence J Consum Res 199522(1)90ndash7
Herrmann GM Garage sales makes good neighbors building community throughneighborhood sales Hum Organ 200665(2)181ndash91
Herrmann GM Soiffer SM For fun and pro1047297t an analysis of the American garage saleUrban Life 198412(4)397ndash421
Kahneman D Tversky A Prospect theory an analysis of decision under risk
Econometrica 197947(2)263ndash
91Kahneman D Tversky A Choices value and frames Am Psychol 198339(4)341 ndash50Kalyanaram G Winer RS Empirical generalizations fromreference priceresearch Mark
Sci 199514(3)161ndash9Kamins MA Dreze X Folkes VS Effects of seller-supplied prices on buyers product
evaluationreferenceprices in an internet auction context J ConsumRes 200430(4)622ndash8
Kim HM The effect of salience on mental accounting how integration versus segrega-tion of payment in1047298uences purchase decisions J Behav Decis Making 200619(4)381ndash91
Kivetz R Advances in research on mental accounting and reason-based choice MarkLett 199910(3)249ndash66
Lattin JM Bucklin RE Reference effects of price and promotion on brand choicebehavior J Mark Res 198926(3)299ndash310
Lichtenstein DR Bearden WO An investigation of consumer evaluations of referenceprice discount claims J Bus Res 198817(2)189ndash200
Linville PW Fischer GW Preferences for separating or combining events J Pers SocPsychol 199160(1)5-23
Monroe KB Lee AY Remembering versus knowingissues in buyers processing of price
information J Acad Mark Sci 199927(2)207ndash25Moon S Voss G How do price range shoppers differ from reference price point
shoppers J Bus Res 200962(1)31ndash8Nunes J Boatwright P Incidental prices and their effect on willingness to pay J Mark
Res 200441(4)457ndash66Okada EM Trade-ins mental accounting and product replacement decisions J Consum
Res 200127(4)433ndash46Paden N Stell R Consumer product redistribution disposition decisions and channel
options J Mark Channels 200512(3)105ndash23Prelec D Loewenstein G The red and the black mental accounting of savings and debt
Mark Sci 199817(1)4-28Purohit D Exploring the relationship between the markets for new and used durable
goods the case of automobiles Mark Sci 199211(2)154ndash67Purohit D Playing theroleof buyerand seller the mental accounting oftrade-ins Mark
Lett 19956(2)101ndash10Rajendran KN Tellis GJ Contextual and temporal components of reference price J Mark
199458(1)22ndash34Sha1047297r E Simonson I Tversky A Reason-based choice Cognit 199349(12)11ndash36Sha1047297r E Thaler RH Invest now drink later spend never on the mental accounting of
delayed consumption J Econ Psychol 200627(5)694ndash712Sherry Jr JF A sociocultural analysis of a midwestern American 1047298ea market J Consum
Res 199017(1)13ndash30Strahilevitz MA Myers JG Donations to charity as purchase incentives how well they
work maydepend onwhatyou aretryingto sell J ConsumRes 199824(4)434ndash46Thaler RHTowardsa positivetheoryof consumerchoice J EconBehavOrgan19801(1)
39ndash60Thaler RH Mental accounting and consumer choice Mark Sci 19854(3)199ndash214Thaler RH Mental accounting matters J Behav Decis Making 199912(3)183ndash206Thaler RH Johnson EJ Gambling with the house money and trying to break even the
effects of prior outcomes on risky choice Manage Sci 199036(6)643ndash60Tversky A Kahneman D Judgment under uncertainty heuristics and biases Sci
1974185(4157)1124ndash31Tversky A Kahneman D The framing of decisions and the psychology of choice Sci
1981211(4481)453ndash8Tversky A Kahneman D Loss aversion in riskless choice a reference-dependent model
Quart J Econ 1991106(4)1039ndash61Urbany JE Bearden WO Weilbaker DC The effect of plausible and exaggerated refer-
ence prices on consumer perceptions and price search J Consum Res 198815(1)95-111
Winer RS A reference price model of brand choice for frequently purchased products J Consum Res 198613(2)250ndash6
Winer RS A multi-stage model of choice incorporating reference prices Mark Lett19891(1)27ndash36
Yam Survey (2006) httptaiwanyamorgtwsurvey Zhao H Jagpal S The effect of secondhand markets on the 1047297rms dynamic pricing and
new product introduction Int J Res Mark 200623(3)295ndash307
1078 H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
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To study consumer online resale behavior and its in1047298uence on
purchase decisions we broadened this concept of reference price
which applies only to the buying phase to include reference prices
that are used while making online resale decisions That is we
developed the concept of ldquoresale reference pricerdquo by de1047297ning an
ldquointernal resale reference pricerdquo (IRRP) as the resale price consumers
accept based on subjective estimations and the concept of ldquoexternal
resale reference pricerdquo (ERRP) as the potential market price of resold
items that sellers can infer based on market information We proposethat resale reference price is an important factor that in1047298uences
consumer resale behavior and purchase decisions because it relates
directly to the cost and bene1047297t of possessing a product
Given that the idea of ldquothe consumer as resellerrdquo is relatively new
we applied theconcept of mental accounting (Thaler 1985) to explain
and investigate the following (1) how consumers might act with
respect to buying when they are aware or unaware of future online
resale opportunity (2) how consumer purchase intention changes as
one compares the cost of an item and future resale returns against
ERRP information and (3) how consumer purchase intention may be
in1047298uenced by the interaction between ERRP and the expected likeli-
hood of resale
2 Theoretical foundation and hypotheses
Drawing on prospect theory (Kahneman and Tversky 1979 1983)
Thaler (1985) developed ldquomental accountingrdquo principles to explain
how people maximize the utility of a decision via a process of coding
categorizing and evaluating multiple events related to that decision
Given the shape of the value function it is better to segregate
ldquomultiple gainsrdquo and ldquomixed lossesrdquo and to integrate ldquomultiple lossesrdquo
and ldquomixed gainsrdquo (see Thaler 1980 1985) All of these principles
with the possible exception of the rule of integration of multiple
losses are generally robust (Kim 2006 Thaler 1999) and are sup-
ported by many empirical tests (Gourville and Soman 1998 Heath
et al 1995 Linville and Fischer 1991 Thaler and Johnson 1990)
Mental accounting assumes that people practice hedonic editing
that is multiple events are determined by whether they are mentally
integrated or separated before they are subjectively evaluated tomake individuals happier (Thaler 1985) Under this assumption
consumers may set budgets for categories of expenses and use
resources differently depending on how they are mentally ldquolabeledrdquo
(Heath and Soll 1996 Thaler 1980 1985) They may even create
ldquomental accountsrdquo when making a purchase and practice ldquomental
depreciationrdquo to spread the cost of an item implicitly over time or use
By adding an assessment of consumption to their subjective account
they can also align costs and bene1047297ts to make an expense seem less
like a ldquolossrdquo (Heath and Fennema 1996) In other words for goods
that are acquired and used consumers may subjectively depreciate
the initial purchase price and create a mental book value for the
product as it isused(Heath and Fennema 1996) When a replacement
purchase is made the buyer also ldquopaysrdquo a subjective price that is equal
to a write-off of this remaining book value (Okada 2001 Purohit1995)
In a consumer purchasing and consumption model payments for
products can be viewed as losses whereas the bene1047297ts derived from
continuously using the products can be considered gains (Prelec and
Loewenstein 1998 Sha1047297r and Thaler 2006 Thaler 1999) Thus let X
be the bene1047297t of possessing product A v( X ) the value of possessing
product A in the value function of the Prospect Theory Y the price of
product A v(Y ) the value of saving the cash (not purchasing Y )
equivalent to the cost of product Y Z the resale reference price of
product A and v( Z ) the value of reselling product A online at a price
of Z Then when v( X )minusv(Y )b0 consumerswill have a lower intention
to purchase that product because there is a net loss upon purchase
(Okada 2001) However the online resale return of a resalable item
v( Z ) could be seen as a gain which if high enough may cover the net
loss associated with the purchase If so then v( X )minusv(Y )) + v( Z )N0
Because individuals are loss averse (Kahneman and Tversky 1979
Tversky and Kahneman 1991) they are typically much more satis1047297ed
when they can integrate a loss (v( X )minusv(Y )) with an equivalent or
larger gain (v( Z )) (Thaler 1985 Linville and Fischer 1991) By
combining both purchase and resale assessments a buyer has an
opportunity to eliminate the loss with the perceived future gain thus
avoiding the pain of experiencing the loss on its own ( Heath and
Fennema 1996)Under the above circumstances it may be easier to stimulate the
desire to buy a product among consumers with high online resale
awareness than among consumers with low online resale awareness
As high-awareness consumers consider the future disposable cash
they will receive from the future online resale they may feel more
comfortable 1047297nancially which may ease their sensitivity toward the
price of the current purchase and therefore enhance their purchase
intention In this way a resaleplan makes more brands and individual
products affordable
H1 Prior to a purchase consumers who are highly aware of the
possibility of reselling a good online after acquiring it has a greater
intentionto buythe good than thosewith lowonlineresale awareness
Consumers are concerned about the mental book value of areusable item and are able to estimate it mentally (Okada 2001
Purohit 1995) Therefore the price at which they can resell a
possession should be an important factor affecting their initial
purchase decision for that possession assuming that resale awareness
is formed prior to the purchase Even then only when the resale price
is high enough can individuals practice mixed gain by hiding a small
loss into the larger gain In the value function v( X )minusv(Y ) + v( Z ) the
higher the ERRP the more return or value the consumer can expect to
receive v( Z ) or the higher the net gain from integrating the purchase
cost and online resale return On the other hand when a consumer
resells a possession the subjective book value of the resold item will
most likely become the IRRP of that item which is a key factor to
consider when evaluating whether an ERRP is reasonable and
acceptable A higher resale price indicates a lower depreciation ratewhich drives the ERRP higher than the IRRP thus making consumers
more satis1047297ed with the product
H2 Among consumers with high online resale awareness the higher
the ERRP of a good the greater their intention to purchase the good
Building on Tversky and Kahneman (1981) who found that
individuals may act differently toward the same scenario described in
two different ways we propose that a consumers purchase intention
can be enhanced in at least two different ways by either a positive or
negative framing condition In a positive framing condition con-
sumers focus on the resale return interpreting the situation as an
increase in bene1047297t Because consumers suffer the pain of paying
when purchasing a good (Prelec and Loewenstein 1998 Sha1047297r and
Thaler 2006 Thaler 1999) they are eager to overcome that pain bydeveloping positive justi1047297cation for making the purchase (Kivetz
1999 Sha1047297r et al 1993 Strahilevitz and Myers 1998) One way to
maximum value of consumption is to create a mental account of
estimated resale return and add the expected return into it to cover
the loss of purchase
Sha1047297r and Thaler (2006) investigated how consumption may be
mentally separated or decoupled temporally (Gourville and Soman
1998 Prelec and Loewenstein 1998) from purchase They found that
such goods are assessed using multiple frames and alternative
accounting schemes and are often mentally coded as incurring no
cost or even as savings The authors argued that the value of items can
change for a variety of reasons including depreciation appreciation
market valuation the cost of money and personal taste Based on
these 1047297ndings we propose that when consumers acknowledge a
1074 H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
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feasible resale plan prior to a purchase they will not conceptually
spread the total cost and depreciate its value evenly over its period of
consumption as they would for a conventional purchase but rather
will expect a potentially high return upon resale Under this scenario
a higher ERRP (ie higher secondary price and thus higher estimated
resale return) leads to a greater v( Z ) and is thus a more persuasive
reason to make the initial purchase Therefore we propose the fol-
lowing hypothesis to further examine the purchasing psychology of
consumersH3 Estimated resale return has a mediatingeffect on the relationship
between ERRP and purchase intention Speci1047297cally an increase in
ERRP will lead to an increase in estimated resale return which in turn
increases purchase intention
In contrast in a negative framing condition consumers may men-
tally deduct an items estimated resale value from the actual initial
payment interpreting the situation as a decrease in payment In this
way consumers feel more comfortable with the deal by pretending
that the item cost less than it did at that point in time The process of
consumption may also affect a consumers mental accounting For
instance transportation costs search costs or waiting time could
possibly increase the perceived payment while an unexpected
discount in stores (Ha et al 2006) could decrease the accountA higher ERRP indicates that an item has a higher residual value
after usage This value can be considered another form of cash
possessed by a consumer with a resalableitemthat isa portion of the
payment is considered inherent to or ldquostored valuerdquo of the merchan-
dise thus subjectively decreasing the perceived purchase payment
This can be illustrated by the value function v( X )minusv(Y minus Z ) Indeed
given thesame bene1047297ts v( X ) consumers prefer a higher Z and a lower
cost v(Y minus Z ) therefore a higher ERRP increases purchase intention
H4 The perceived purchase payment has a mediating effect on the
relationship between ERRP and purchase intention Speci1047297cally an
increase in ERRP will lead to a decrease in the perceived purchase
price which in turn increases purchase intention
Several studies report that reference cues as numbers whetherrelated (Chandrashekaran and Grewal 2006 Urbany et al 1988) or
unrelated (Nunes and Boatwright 2004 Tversky and Kahneman
1974) to a given topic can have an anchoring effect (Tversky and
Kahneman 1974) on an individuals decision The effect refers to the
adjustment of ones assessment higher or lower based on the
previously presented external information or ldquoanchorrdquo For instance
consumer internal price perception at the time of purchase can be
in1047298uenced by providing an external price for that same item
(Chandrashekaran and Grewal 2006) or even a different item
(Nunes and Boatwright 2004) In these studies the external and
internal prices are both directly related to the payment to purchase
a good which thus places them at the same conceptual level for
comparison
However the essence of resale reference price (ERRP and IRRP) isquite different First it relates directly to resale instead of purchase
activity and refers to the money consumers will receive after selling a
possession rather than the price they should pay Thus resale refer-
ence price is on a different conceptual level and cannot be compared
directly to reference price of purchase Further the items being resold
are typically usedsecondhand which further complicates the
calculation of resale price IRP derives mainly from previous purchase
experience (Lattin and Bucklin 1989 Winer 1989) while IRRP is
in1047298uenced by product usage mental depreciation (Okada 2001
Purohit 1995) and personal online resale skills and experience (Chu
and Liao 2008) in addition to previous purchase experience
Another difference between traditional reference prices and our
proposed resale reference prices is the timing Resale reference price
occurs after an item has been acquired while the reference price of
purchase occurs before the item is acquired The temporal gap makes
the in1047298uence of resale reference price on purchase decisions differ
from the in1047298uence of the traditional reference price because more risk
and uncertainty are involved For instance consumers may largely
discount the resale values because the online resale will happen
farther in the future and the quality of the product or market situation
at that time is uncertain Accordingly we contended that ERRPs
related directly to the bene1047297ts of acquiring a product could be seen as
one of the most important product attributes when making purchaseevaluations Therefore the effect of ERRPs on purchase intention
rather than simply being an external anchoring was achieved through
careful mental deliberation about the products bene1047297ts and costs In
other words a high ERRP will not generate the same in1047298uence on a
consumers purchase intentiononce he or she is aware that thechance
of making a successful online resale is very low
H5a The ERRP of a good will not in1047298uence purchase intention when
consumers are aware that the resale possibility is extremely low
H5b The higher a goods ERRP the greater its in1047298uence on purchase
intention when consumers are aware that the resale possibility is
extremely high
3 Study 1
31 Method
We used a between-subjects design to examine the hypotheses
and chose a mobile phone for the experiment because it is the best-
selling item in Taiwans online auctions (Yam Survey 2006) We set
the initial tag price for the newest most traded item among mobile
phones at NT$10000 (approximately US$312) and the ERRP at three
levels NT$3000 (US$93) NT$6000 (US$187) and NT$9000 (US$281)
to manipulate low medium and high prices respectively We select-
ed these pricesbecause they correspond to the average IRRP reported
under both optimistic and pessimistic conditions by 80 members of
the online community Youthwant (wwwyouthwantcomtw) in our
online pilot study The ERRP of NT$9000 (high ERRP condition) isabove the average optimistic resale price (NT$7311) while NT$6000
(medium ERRP condition) is between the average optimistic resale
and pessimistic resale price (NT$4392) and NT$3000 (low ERRP
condition) is below the average pessimistic resale price
The formal online questionnaire consisted of four sections The
1047297rst section provided a product description and a photo followed by a
priming manipulation of future online resale possibility (low vs high)
Section 2 measured the respondents IRRPs of the target product
at three levels (highest average and lowest) and provided three
manipulation check questions on the stimuli provided in Section 1
Section 3 described the hypothetical buying price of the target
product and the ERRP for manipulation Section 4 presented a
manipulation check item about the ERRP information in the previous
section and measured the respondents intention to buy the targetproduct the expected future resale return their subjective purchase
payment after con1047297guring purchase cost and estimated resale return
The independent variables for each description were online resale
awareness (low and high) and ERRP (low medium high) with the
ERRP manipulated only for the high-awareness groups This resulted
in four versions of the questionnaire for the main study in which the
subjects were assigned to one low-awareness group and three high-
awareness groups with three ERRP levels set individually
We also conducted the main experiment on Youthwant The
sample consisted of 477 participants with an average age of 25 years
Of these 63 were high school students 199 were undergraduate or
graduate college students and 215 were not students Of the 477
participants 270 had online resale experience and 207 did not All of
the participants were registered members of Youthwant They were
1075H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
httpslidepdfcomreaderfullbuying-while-expecting-to-sell-the-economic-psychology-of-online-resale 46
compensated fortheir participation in thestudy with 30 virtual points
(approximately NT$30) which they could spend on gifts or for Web
site services The research was limited to C2C online auctions but
individuals who had never resold anything via an online auction were
allowed to participate The wording we used to describe an intention
to purchase would be clear to anyone with a basic understanding of
C2C online auctions To improve reliability each subject was allowed
to complete only one questionnaire using the Web site system
controlAll participants read a description of a purchase decision about a
new mobile phone costing NT$10000 The low-awareness group read
a scenario indicating that the possibility of reselling the new mobile
phone online after acquiring it was low The high-awareness groups
read one of three different scenarios all of which indicated that the
possibility of reselling the new mobile phone was high Each scenario
in the high-awareness groups offered a different ERRP as described
previously Finally we asked the participants in all four groups to rate
their intention to purchase the new mobile phone using a 7-point
Likert scale In addition we asked the high-awareness groups to
estimate the online resale return and the perceived purchase
payment The results of the manipulation check to con1047297rm if the
provided scenarios of online resale awareness and ERRPs were
well received showed that all of the manipulations were enacted as
intended
32 Results
Table 1 lists the descriptive statistics of dependent variables for all
experimental groups A t -test conducted on intention to purchase
yielded a signi1047297cant difference between the low- and high-awareness
groups (t =minus451 pb 001) This result supports H1 that consumers
with high online resale awareness will have a greater intent to
purchase
A one-way ANOVA conducted on intention to purchase among
the three high-awareness groups revealed signi1047297cant between-
group differences (F =162 p b 001) A Scheffe post-hoc test further
demonstrated signi1047297cant mean differences among the groups (HighN
MediumNLow psb 05) Thus as predicted H2 is supported by theresults among consumers who have high online resale awareness for
a particular product a higher ERRP led to a greater intent to purchase
To examine H3 we performed a one-way ANOVA on the estimated
resale return ratings of the three high-awareness groups There was a
signi1047297cant between-group effect (F =167631 pb 001) which we
con1047297rmed by signi1047297cant Scheffe post-hoc tests (HighNMediumNLow
psb 001) Hence among consumers with high online resale aware-
ness the higher the ERRP the higher the estimated resale return
Next we conducted a simple regression analysis to test the rela-
tionship between estimated resale return and intention to purchase
As expected purchase intention was positively related to estimated
resale return ( β =329 pb 001) To test the mediating effect of esti-
mated resale return we followed a three-step procedure suggestedby
Baron and Kenny (1986) A mediating effect can be assumed if the
following criteria are met (1) there is a signi1047297cant relationship
between the independent (ERRPs) and dependent (intention to
purchase) variables (2) there is a signi1047297cant relationship between the
independent variable (ERRPs) and the mediator (estimated resale
return) and (3) the effect of the independent variable (ERRPs) on the
dependent variable (intention to purchase) is signi1047297
cantly reducedafter the mediator (estimated resale return) is added to the equation
The regression analyses demonstrated a complete mediating effect of
estimated resale return as (1) ERRP had a signi1047297cantly positive effect
on purchase intention ( β =289 pb 001) (2) estimated resale return
had a signi1047297cantly positive effect on purchase intention ( β =329
pb 001) and (3) β (117) for ERRP in the multiple regression model
was no longer signi1047297cant ( p =094N 05) whereas β (247) for the
estimated resale return remained signi1047297cant ( pb 001) In addition a
Sobel test was signi1047297cant (Sobel test statistic=268 pb 01) suggest-
ing that estimated resale return mediated the main effect of ERRP on
purchase intention Thus the statistical evidence supports H3
A one-way ANOVA performed to test H4 revealed a signi1047297cant
between-group effect on perceived purchase payment among the
three high-awareness groups (F =10322 p b 001) Scheffe post-hoc
tests (HighbMediumbLow psb 001) con1047297rmed this result Accord-
ingly among consumers with high online resale awareness the
higherthe ERRP the lower the perceived purchase payment Next we
calculated a simple regression to determine the relationship between
perceived purchase payment and intention to purchase As expected
there was a negative relationship between purchase intention and
perceived purchase payment ( β =minus 201 pb 001) indicating that
the higher the perceived purchase payment the lower the intention
to buy We applied the same three-step procedure (Baron and
Kenny 1986) described for H3 to test the mediating effect of
perceived purchase payment for H4 The results showed no signi1047297cant
mediating effect of perceived purchase payment between ERRP and
purchase intention as β for ERRP in the multiple regression model
remained signi1047297cant ( β =26 pb 001) after perceived purchase
payment was included in the equation whereas β for perceived pur-chase payment was insigni1047297cant ( β =minus 05 p =41N 05) Thus H4 is
only partially supported because perceived purchase payment did not
mediate the main effect of ERRP on purchase intention
Comparing this insigni1047297cant result (H4) to the substantiated
mediating effect of estimated resale return (H3) payment perception
did not in1047298uence the relationship between ERRP and purchase
intention as much as did estimated resale return during consumers
subjective evaluations of online resale This implies that consumers
1047297nd it dif 1047297cult to deduce the net purchase payment based on ERRP
cues That is they feel a strong loss of money upon making a payment
which cannot be resolved by expected return in the future In other
words they do not equate the resale value of possessions with cash
Therefore the increased purchase intention is derived mainly by a
higher net gain perception based on estimated resale return This mayexplain why there was no mediating effect of perceived purchase
payment
4 Study 2
41 Method
We conducted Study 2 to con1047297rm that the effect of ERRPs on
consumers intention to purchase did not derive from an anchoring
effect but rather a mental accounting effect For the experiment we
used a 2 (extremely low resale possibility vs extremely high resale
possibility)times2 (low vs high ERRP) between-subjects design admin-
istered on the Youthwant online community We replicated the pro-
cedure of Study 1 but manipulated four different purchase scenarios
Table 1Descriptive statistics of Study 1
Numbers of
participants
Intention to
purchase
Estimated
resale return
Perceived
payment
Mean S D Mean S D Mean S D
Low online
resale
awareness
120 331 133 NA
High online
resale
awareness
357 401 153 5 47713 274868 4610 94 349356
Low ERRP 118 3 46 153 3 16525 130387 715847 156081
Medium
ERRP
119 403 129 5 37552 150885 4741 03 363620
High ERRP 120 4 54 158 785123 2 77116 1 97686 2 74907
Abbreviations ERRP external resale reference price SD standard deviation
1076 H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
httpslidepdfcomreaderfullbuying-while-expecting-to-sell-the-economic-psychology-of-online-resale 56
to test interaction effects We organized the questionnaire as follows
After reading the same online purchase scenarios for a cell phone we
informed participants that the chance to resell the cell phone online
successfully was either ldquoextremely lowrdquo or ldquoextremely highrdquo The
questionnaire emphasized this wording to ensure that participants
perceived the manipulation of resale possibility strongly and clearly
To con1047297rm we performed manipulation checks to ask participants to
assess their perception using a 7-point Likert scale of the chance to
resell the target item successfully with 1 being extremely low and 7
being extremely high The group that showed high resale possibility
had a higher perception of resale likelihood than the low-possibility
group (M = 648 vs 166 t =minus797 pb 001) Following this exercise
we gave these participants purchase scenarios for a low ERRP (NT
$3000) and a high ERRP (NT$9000) respectively as a second test of
manipulating factors Finally we queried each groups intention to
purchase the cell phone In Study 2 the sample consisted of 440
participants with an average age of 24 years There were 110 subjects
in each group Of the total 54 were high school students 189 were
undergraduate or graduate college students and 197 were not
students Among the 440 participants 287 had online resale experi-
ence and 153 did not All of the participants were registered members
of Youthwant and had not participated in previous experiments
42 Results
Table 2 lists the descriptive statistics of dependent variables for all
experiment groups and Table 3 shows the results of a two-way
ANOVA with resale possibility and resale price as the independent
variables and intention to purchase as the dependent variable There
were signi1047297cant interaction effects (F =136 pb 001) which implies
that the effect of ERRP on purchase intention may be moderated by
perceived resale possibility
In support of H5a participants with a perception of extremely low
resale possibility showed the same level of purchase intention under
both low and high ERRP situations (t =088 p =038) And in support
of H5b participants who perceived an extremely high resalepossibility showed a higher purchase intention when stimulated
with a high ERRP (t =5485 pb 001) See Fig 1
In Study 2 ERRPs did not have a signi1047297cant effect on purchase
intention when consumers did not see a future resale bene1047297t for the
item In other words consumers are in1047298uenced by ERRPs only when
resale feasibility is high The results also indicate that a simple
anchoringeffect did not cause theincreased purchase intentionwith a
higher ERRP in Study 1 if it had it would have been present and thus
would have in1047298uenced purchase intention when the resale possibility
was extremely low in Study 2 This conclusion is reinforced by the
results indicating that the mean purchase intention in the extremely
low resale possibility groups of Study 2 was signi1047297cantly lower than
that of the low resale awareness group in Study 1 (M =264 vs 331
t =minus468 pb 001) This demonstrates that consumers are concerned
about the resale result and may feel disappointed about the failure of
an expected resale once their resale awareness is triggered
5 Discussion
Our results indicate that online resale awareness can signi1047297cantly
in1047298uence a consumers buying intentionprior to a purchase Informing
consumers about their future chances to resell a good prompts theirawareness and expectations for online resale which in turn enhances
their intentionto purchase thegood Therefore we suggest that online
resale awareness and expectations are important factors affecting both
purchasing and reselling behaviors
In addition once consumers have developed online resale aware-
ness their intention to purchase a good is affected by the ERRP level
The higher the perceived future resale price the more willing
consumers are to buy an item This implies that product preference
is determined not only by personal taste and product attributes but
also by the chances and outcome of the future resale Further we
discovered that aside from listing the acquisition price of a good
payment perception and estimated resale return in particular had the
greatest in1047298uence on purchase intention and resale plans These two
constructs are closely associated with the concepts of mental depre-ciation (Heath and Fennema 1996) and mental book value (Okada
2001) To be more speci1047297c a high ERRP signals a lower depreciation
rate a higherresale return anda lower acquisition cost of a good thus
making the good more desirable to purchase
Finally the mediating effect of estimated resale return between
ERRP and purchase intention suggests that consumers integrate
mixed gains (Thaler 1985 1999) by combining events subjectively to
boost perceived utility or to justify their purchase (Kivetz 1999
Sha1047297r et al 1993 Strahilevitz and Myers 1998) The present study
did not require participants to have online resale experience which
implies that consumers in general even those without such ex-
perience or plans to resell possessions online prefer products with a
higher resale price This indicates that a higher resale price may be an
important product attribute for consumers with resale awareness
Table 2
Descriptive statistics of Study 2
Resale possibility Resale reference
price
Numbers of
participants
Intention to
purchase
Mean S D
Extremely low online
resale possibility
Low ERRP 110 256 132
High ERRP 110 271 113
Total 220 264 123
Extremely high online
resale possibility
Low ERRP 110 343 151
High ERRP 110 454 149
Total 220 398 160
Total Low ERRP 220 300 148
High ERRP 220 362 160
Total 440 331 157
Abbreviations ERRP external resale reference price SD standard deviation
Table 3
Summary of ANOVA test of Study 2
Source Mean square F
Resale possibility 199127 106134
ERRP 43282 23069
Resale possibilityERRP 25536 13611
Abbreviations ERRP external resale reference price
Note Signi1047297cant at pb0001
Note
Signi1047297cant at pb
0001
Fig 1 Interaction effects of resale possibility and externalresale reference price(ERRP)
1077H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
httpslidepdfcomreaderfullbuying-while-expecting-to-sell-the-economic-psychology-of-online-resale 66
Finally the results of Study 2 con1047297rm that a mental evaluation process
about the bene1047297ts and costs of acquiring a product and not an
anchoring effect causes the observed effects of ERRPs and that the
failure of an expected resale may cause discon1047297rmation and thus
decrease purchase intention
6 Managerial implications
Our results imply that consumers who intend to resell online mayperceive lower purchase risk than those who intend only to buy They
are also more willing to purchase goods that they initially hesitated to
buy when they are aware that they can resell the goods they 1047297nd
unsatisfactory We suggest that marketers should consider the
changes brought about by the online secondary market in particular
the potential link between a new product and these secondary
markets (Purohit 1992 Zhao and Jagpal 2006) Whereas the
speculated cannibalization effect predicts that the C2C online auction
market may steal some sales from retailers the actions of online
auction sites that resell goods consumers do not want may actually
lead to increased sales of new products by retailers ( Paden and Stell
2005) Thus marketers should look favorably upon and implement
strategies to exploit secondary markets
7 Limitations and future research
Thepresent study has some limitations First all of the participants
were from the same online community in Taiwan More online and
of 1047298ine participants even persons from traditional secondary markets
should be tested to gain a deeper understanding of consumer pur-
chasing and resale behavior In addition we conducted the study in a
Chinese context and thus additional research is needed to investigate
consumer online resale behavior in other contexts As Chu and Liao
(2008) noted the product personal characteristics of the consumer
and situational factors can all in1047298uence consumer resale decisions
Thus future studies should include a wider range of products with
different characteristics participants with different levels of resale
experience and a variety of decision situations to further generalize
and con1047297rm the robustness of our 1047297ndings Finally ERRP is an im-portant factor that affects consumer online resale decisions Increas-
ing the number of different ERRP levels and enabling comparisons
among them could provide a more complete understanding of con-
sumer resale behavior The relationship between IRRPs and ERRPs as
well as how consumers determine resale prices is another potential
topic for further research
References
Baron RM Kenny DA The moderator-mediator variable distinction in social psycho-logical research conceptual strategic and statistical considerations J Pers SocPsychol 198651(6)1173ndash82
Belk RW Possessions and the extended self J Consum Res 198815(2)130ndash68Chandrashekaran R Grewal D Anchoring effects of advertised reference price and sale
price themoderatingrole of saving presentationformat J Bus Res200659(10ndash11)
1063ndash71Chu H Liao S Exploring consumer resale behavior in C2C online auctions taxonomy
and in1047298uences on consumer decisions Acad Mark Sci Rev 200711(3)1-27Chu H Liao S Toward a conceptual model of consumer online resale behavior an
exploratory study in Taiwan J Internet Commerce 20087(2)220ndash52Einhorn H Hogarth R Decision making under ambiguity J Bus 198659(4)225 ndash50Gourville JT Soman D Payment depreciation the behavioral effects of temporally
separating payments from consumption J Consum Res 199825(2)160ndash74Ha HH Hyun JS Pae JH Consumers mental accounting in response to unexpected price
savings at the point of sale Mark Intell Plann 200624(4)406ndash16
Heath C Fennema MG Mental depreciation and marginal decision making OrganBehav Hum Decis Process 199668(2)95-108
Heath C Soll JB Mental budgeting and consumer decisions J Consum Res 199623(1)40ndash52
Heath T Chatterjee S France K Mental accounting and changes in price the framedependence of reference dependence J Consum Res 199522(1)90ndash7
Herrmann GM Garage sales makes good neighbors building community throughneighborhood sales Hum Organ 200665(2)181ndash91
Herrmann GM Soiffer SM For fun and pro1047297t an analysis of the American garage saleUrban Life 198412(4)397ndash421
Kahneman D Tversky A Prospect theory an analysis of decision under risk
Econometrica 197947(2)263ndash
91Kahneman D Tversky A Choices value and frames Am Psychol 198339(4)341 ndash50Kalyanaram G Winer RS Empirical generalizations fromreference priceresearch Mark
Sci 199514(3)161ndash9Kamins MA Dreze X Folkes VS Effects of seller-supplied prices on buyers product
evaluationreferenceprices in an internet auction context J ConsumRes 200430(4)622ndash8
Kim HM The effect of salience on mental accounting how integration versus segrega-tion of payment in1047298uences purchase decisions J Behav Decis Making 200619(4)381ndash91
Kivetz R Advances in research on mental accounting and reason-based choice MarkLett 199910(3)249ndash66
Lattin JM Bucklin RE Reference effects of price and promotion on brand choicebehavior J Mark Res 198926(3)299ndash310
Lichtenstein DR Bearden WO An investigation of consumer evaluations of referenceprice discount claims J Bus Res 198817(2)189ndash200
Linville PW Fischer GW Preferences for separating or combining events J Pers SocPsychol 199160(1)5-23
Monroe KB Lee AY Remembering versus knowingissues in buyers processing of price
information J Acad Mark Sci 199927(2)207ndash25Moon S Voss G How do price range shoppers differ from reference price point
shoppers J Bus Res 200962(1)31ndash8Nunes J Boatwright P Incidental prices and their effect on willingness to pay J Mark
Res 200441(4)457ndash66Okada EM Trade-ins mental accounting and product replacement decisions J Consum
Res 200127(4)433ndash46Paden N Stell R Consumer product redistribution disposition decisions and channel
options J Mark Channels 200512(3)105ndash23Prelec D Loewenstein G The red and the black mental accounting of savings and debt
Mark Sci 199817(1)4-28Purohit D Exploring the relationship between the markets for new and used durable
goods the case of automobiles Mark Sci 199211(2)154ndash67Purohit D Playing theroleof buyerand seller the mental accounting oftrade-ins Mark
Lett 19956(2)101ndash10Rajendran KN Tellis GJ Contextual and temporal components of reference price J Mark
199458(1)22ndash34Sha1047297r E Simonson I Tversky A Reason-based choice Cognit 199349(12)11ndash36Sha1047297r E Thaler RH Invest now drink later spend never on the mental accounting of
delayed consumption J Econ Psychol 200627(5)694ndash712Sherry Jr JF A sociocultural analysis of a midwestern American 1047298ea market J Consum
Res 199017(1)13ndash30Strahilevitz MA Myers JG Donations to charity as purchase incentives how well they
work maydepend onwhatyou aretryingto sell J ConsumRes 199824(4)434ndash46Thaler RHTowardsa positivetheoryof consumerchoice J EconBehavOrgan19801(1)
39ndash60Thaler RH Mental accounting and consumer choice Mark Sci 19854(3)199ndash214Thaler RH Mental accounting matters J Behav Decis Making 199912(3)183ndash206Thaler RH Johnson EJ Gambling with the house money and trying to break even the
effects of prior outcomes on risky choice Manage Sci 199036(6)643ndash60Tversky A Kahneman D Judgment under uncertainty heuristics and biases Sci
1974185(4157)1124ndash31Tversky A Kahneman D The framing of decisions and the psychology of choice Sci
1981211(4481)453ndash8Tversky A Kahneman D Loss aversion in riskless choice a reference-dependent model
Quart J Econ 1991106(4)1039ndash61Urbany JE Bearden WO Weilbaker DC The effect of plausible and exaggerated refer-
ence prices on consumer perceptions and price search J Consum Res 198815(1)95-111
Winer RS A reference price model of brand choice for frequently purchased products J Consum Res 198613(2)250ndash6
Winer RS A multi-stage model of choice incorporating reference prices Mark Lett19891(1)27ndash36
Yam Survey (2006) httptaiwanyamorgtwsurvey Zhao H Jagpal S The effect of secondhand markets on the 1047297rms dynamic pricing and
new product introduction Int J Res Mark 200623(3)295ndash307
1078 H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
httpslidepdfcomreaderfullbuying-while-expecting-to-sell-the-economic-psychology-of-online-resale 36
feasible resale plan prior to a purchase they will not conceptually
spread the total cost and depreciate its value evenly over its period of
consumption as they would for a conventional purchase but rather
will expect a potentially high return upon resale Under this scenario
a higher ERRP (ie higher secondary price and thus higher estimated
resale return) leads to a greater v( Z ) and is thus a more persuasive
reason to make the initial purchase Therefore we propose the fol-
lowing hypothesis to further examine the purchasing psychology of
consumersH3 Estimated resale return has a mediatingeffect on the relationship
between ERRP and purchase intention Speci1047297cally an increase in
ERRP will lead to an increase in estimated resale return which in turn
increases purchase intention
In contrast in a negative framing condition consumers may men-
tally deduct an items estimated resale value from the actual initial
payment interpreting the situation as a decrease in payment In this
way consumers feel more comfortable with the deal by pretending
that the item cost less than it did at that point in time The process of
consumption may also affect a consumers mental accounting For
instance transportation costs search costs or waiting time could
possibly increase the perceived payment while an unexpected
discount in stores (Ha et al 2006) could decrease the accountA higher ERRP indicates that an item has a higher residual value
after usage This value can be considered another form of cash
possessed by a consumer with a resalableitemthat isa portion of the
payment is considered inherent to or ldquostored valuerdquo of the merchan-
dise thus subjectively decreasing the perceived purchase payment
This can be illustrated by the value function v( X )minusv(Y minus Z ) Indeed
given thesame bene1047297ts v( X ) consumers prefer a higher Z and a lower
cost v(Y minus Z ) therefore a higher ERRP increases purchase intention
H4 The perceived purchase payment has a mediating effect on the
relationship between ERRP and purchase intention Speci1047297cally an
increase in ERRP will lead to a decrease in the perceived purchase
price which in turn increases purchase intention
Several studies report that reference cues as numbers whetherrelated (Chandrashekaran and Grewal 2006 Urbany et al 1988) or
unrelated (Nunes and Boatwright 2004 Tversky and Kahneman
1974) to a given topic can have an anchoring effect (Tversky and
Kahneman 1974) on an individuals decision The effect refers to the
adjustment of ones assessment higher or lower based on the
previously presented external information or ldquoanchorrdquo For instance
consumer internal price perception at the time of purchase can be
in1047298uenced by providing an external price for that same item
(Chandrashekaran and Grewal 2006) or even a different item
(Nunes and Boatwright 2004) In these studies the external and
internal prices are both directly related to the payment to purchase
a good which thus places them at the same conceptual level for
comparison
However the essence of resale reference price (ERRP and IRRP) isquite different First it relates directly to resale instead of purchase
activity and refers to the money consumers will receive after selling a
possession rather than the price they should pay Thus resale refer-
ence price is on a different conceptual level and cannot be compared
directly to reference price of purchase Further the items being resold
are typically usedsecondhand which further complicates the
calculation of resale price IRP derives mainly from previous purchase
experience (Lattin and Bucklin 1989 Winer 1989) while IRRP is
in1047298uenced by product usage mental depreciation (Okada 2001
Purohit 1995) and personal online resale skills and experience (Chu
and Liao 2008) in addition to previous purchase experience
Another difference between traditional reference prices and our
proposed resale reference prices is the timing Resale reference price
occurs after an item has been acquired while the reference price of
purchase occurs before the item is acquired The temporal gap makes
the in1047298uence of resale reference price on purchase decisions differ
from the in1047298uence of the traditional reference price because more risk
and uncertainty are involved For instance consumers may largely
discount the resale values because the online resale will happen
farther in the future and the quality of the product or market situation
at that time is uncertain Accordingly we contended that ERRPs
related directly to the bene1047297ts of acquiring a product could be seen as
one of the most important product attributes when making purchaseevaluations Therefore the effect of ERRPs on purchase intention
rather than simply being an external anchoring was achieved through
careful mental deliberation about the products bene1047297ts and costs In
other words a high ERRP will not generate the same in1047298uence on a
consumers purchase intentiononce he or she is aware that thechance
of making a successful online resale is very low
H5a The ERRP of a good will not in1047298uence purchase intention when
consumers are aware that the resale possibility is extremely low
H5b The higher a goods ERRP the greater its in1047298uence on purchase
intention when consumers are aware that the resale possibility is
extremely high
3 Study 1
31 Method
We used a between-subjects design to examine the hypotheses
and chose a mobile phone for the experiment because it is the best-
selling item in Taiwans online auctions (Yam Survey 2006) We set
the initial tag price for the newest most traded item among mobile
phones at NT$10000 (approximately US$312) and the ERRP at three
levels NT$3000 (US$93) NT$6000 (US$187) and NT$9000 (US$281)
to manipulate low medium and high prices respectively We select-
ed these pricesbecause they correspond to the average IRRP reported
under both optimistic and pessimistic conditions by 80 members of
the online community Youthwant (wwwyouthwantcomtw) in our
online pilot study The ERRP of NT$9000 (high ERRP condition) isabove the average optimistic resale price (NT$7311) while NT$6000
(medium ERRP condition) is between the average optimistic resale
and pessimistic resale price (NT$4392) and NT$3000 (low ERRP
condition) is below the average pessimistic resale price
The formal online questionnaire consisted of four sections The
1047297rst section provided a product description and a photo followed by a
priming manipulation of future online resale possibility (low vs high)
Section 2 measured the respondents IRRPs of the target product
at three levels (highest average and lowest) and provided three
manipulation check questions on the stimuli provided in Section 1
Section 3 described the hypothetical buying price of the target
product and the ERRP for manipulation Section 4 presented a
manipulation check item about the ERRP information in the previous
section and measured the respondents intention to buy the targetproduct the expected future resale return their subjective purchase
payment after con1047297guring purchase cost and estimated resale return
The independent variables for each description were online resale
awareness (low and high) and ERRP (low medium high) with the
ERRP manipulated only for the high-awareness groups This resulted
in four versions of the questionnaire for the main study in which the
subjects were assigned to one low-awareness group and three high-
awareness groups with three ERRP levels set individually
We also conducted the main experiment on Youthwant The
sample consisted of 477 participants with an average age of 25 years
Of these 63 were high school students 199 were undergraduate or
graduate college students and 215 were not students Of the 477
participants 270 had online resale experience and 207 did not All of
the participants were registered members of Youthwant They were
1075H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
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compensated fortheir participation in thestudy with 30 virtual points
(approximately NT$30) which they could spend on gifts or for Web
site services The research was limited to C2C online auctions but
individuals who had never resold anything via an online auction were
allowed to participate The wording we used to describe an intention
to purchase would be clear to anyone with a basic understanding of
C2C online auctions To improve reliability each subject was allowed
to complete only one questionnaire using the Web site system
controlAll participants read a description of a purchase decision about a
new mobile phone costing NT$10000 The low-awareness group read
a scenario indicating that the possibility of reselling the new mobile
phone online after acquiring it was low The high-awareness groups
read one of three different scenarios all of which indicated that the
possibility of reselling the new mobile phone was high Each scenario
in the high-awareness groups offered a different ERRP as described
previously Finally we asked the participants in all four groups to rate
their intention to purchase the new mobile phone using a 7-point
Likert scale In addition we asked the high-awareness groups to
estimate the online resale return and the perceived purchase
payment The results of the manipulation check to con1047297rm if the
provided scenarios of online resale awareness and ERRPs were
well received showed that all of the manipulations were enacted as
intended
32 Results
Table 1 lists the descriptive statistics of dependent variables for all
experimental groups A t -test conducted on intention to purchase
yielded a signi1047297cant difference between the low- and high-awareness
groups (t =minus451 pb 001) This result supports H1 that consumers
with high online resale awareness will have a greater intent to
purchase
A one-way ANOVA conducted on intention to purchase among
the three high-awareness groups revealed signi1047297cant between-
group differences (F =162 p b 001) A Scheffe post-hoc test further
demonstrated signi1047297cant mean differences among the groups (HighN
MediumNLow psb 05) Thus as predicted H2 is supported by theresults among consumers who have high online resale awareness for
a particular product a higher ERRP led to a greater intent to purchase
To examine H3 we performed a one-way ANOVA on the estimated
resale return ratings of the three high-awareness groups There was a
signi1047297cant between-group effect (F =167631 pb 001) which we
con1047297rmed by signi1047297cant Scheffe post-hoc tests (HighNMediumNLow
psb 001) Hence among consumers with high online resale aware-
ness the higher the ERRP the higher the estimated resale return
Next we conducted a simple regression analysis to test the rela-
tionship between estimated resale return and intention to purchase
As expected purchase intention was positively related to estimated
resale return ( β =329 pb 001) To test the mediating effect of esti-
mated resale return we followed a three-step procedure suggestedby
Baron and Kenny (1986) A mediating effect can be assumed if the
following criteria are met (1) there is a signi1047297cant relationship
between the independent (ERRPs) and dependent (intention to
purchase) variables (2) there is a signi1047297cant relationship between the
independent variable (ERRPs) and the mediator (estimated resale
return) and (3) the effect of the independent variable (ERRPs) on the
dependent variable (intention to purchase) is signi1047297
cantly reducedafter the mediator (estimated resale return) is added to the equation
The regression analyses demonstrated a complete mediating effect of
estimated resale return as (1) ERRP had a signi1047297cantly positive effect
on purchase intention ( β =289 pb 001) (2) estimated resale return
had a signi1047297cantly positive effect on purchase intention ( β =329
pb 001) and (3) β (117) for ERRP in the multiple regression model
was no longer signi1047297cant ( p =094N 05) whereas β (247) for the
estimated resale return remained signi1047297cant ( pb 001) In addition a
Sobel test was signi1047297cant (Sobel test statistic=268 pb 01) suggest-
ing that estimated resale return mediated the main effect of ERRP on
purchase intention Thus the statistical evidence supports H3
A one-way ANOVA performed to test H4 revealed a signi1047297cant
between-group effect on perceived purchase payment among the
three high-awareness groups (F =10322 p b 001) Scheffe post-hoc
tests (HighbMediumbLow psb 001) con1047297rmed this result Accord-
ingly among consumers with high online resale awareness the
higherthe ERRP the lower the perceived purchase payment Next we
calculated a simple regression to determine the relationship between
perceived purchase payment and intention to purchase As expected
there was a negative relationship between purchase intention and
perceived purchase payment ( β =minus 201 pb 001) indicating that
the higher the perceived purchase payment the lower the intention
to buy We applied the same three-step procedure (Baron and
Kenny 1986) described for H3 to test the mediating effect of
perceived purchase payment for H4 The results showed no signi1047297cant
mediating effect of perceived purchase payment between ERRP and
purchase intention as β for ERRP in the multiple regression model
remained signi1047297cant ( β =26 pb 001) after perceived purchase
payment was included in the equation whereas β for perceived pur-chase payment was insigni1047297cant ( β =minus 05 p =41N 05) Thus H4 is
only partially supported because perceived purchase payment did not
mediate the main effect of ERRP on purchase intention
Comparing this insigni1047297cant result (H4) to the substantiated
mediating effect of estimated resale return (H3) payment perception
did not in1047298uence the relationship between ERRP and purchase
intention as much as did estimated resale return during consumers
subjective evaluations of online resale This implies that consumers
1047297nd it dif 1047297cult to deduce the net purchase payment based on ERRP
cues That is they feel a strong loss of money upon making a payment
which cannot be resolved by expected return in the future In other
words they do not equate the resale value of possessions with cash
Therefore the increased purchase intention is derived mainly by a
higher net gain perception based on estimated resale return This mayexplain why there was no mediating effect of perceived purchase
payment
4 Study 2
41 Method
We conducted Study 2 to con1047297rm that the effect of ERRPs on
consumers intention to purchase did not derive from an anchoring
effect but rather a mental accounting effect For the experiment we
used a 2 (extremely low resale possibility vs extremely high resale
possibility)times2 (low vs high ERRP) between-subjects design admin-
istered on the Youthwant online community We replicated the pro-
cedure of Study 1 but manipulated four different purchase scenarios
Table 1Descriptive statistics of Study 1
Numbers of
participants
Intention to
purchase
Estimated
resale return
Perceived
payment
Mean S D Mean S D Mean S D
Low online
resale
awareness
120 331 133 NA
High online
resale
awareness
357 401 153 5 47713 274868 4610 94 349356
Low ERRP 118 3 46 153 3 16525 130387 715847 156081
Medium
ERRP
119 403 129 5 37552 150885 4741 03 363620
High ERRP 120 4 54 158 785123 2 77116 1 97686 2 74907
Abbreviations ERRP external resale reference price SD standard deviation
1076 H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
httpslidepdfcomreaderfullbuying-while-expecting-to-sell-the-economic-psychology-of-online-resale 56
to test interaction effects We organized the questionnaire as follows
After reading the same online purchase scenarios for a cell phone we
informed participants that the chance to resell the cell phone online
successfully was either ldquoextremely lowrdquo or ldquoextremely highrdquo The
questionnaire emphasized this wording to ensure that participants
perceived the manipulation of resale possibility strongly and clearly
To con1047297rm we performed manipulation checks to ask participants to
assess their perception using a 7-point Likert scale of the chance to
resell the target item successfully with 1 being extremely low and 7
being extremely high The group that showed high resale possibility
had a higher perception of resale likelihood than the low-possibility
group (M = 648 vs 166 t =minus797 pb 001) Following this exercise
we gave these participants purchase scenarios for a low ERRP (NT
$3000) and a high ERRP (NT$9000) respectively as a second test of
manipulating factors Finally we queried each groups intention to
purchase the cell phone In Study 2 the sample consisted of 440
participants with an average age of 24 years There were 110 subjects
in each group Of the total 54 were high school students 189 were
undergraduate or graduate college students and 197 were not
students Among the 440 participants 287 had online resale experi-
ence and 153 did not All of the participants were registered members
of Youthwant and had not participated in previous experiments
42 Results
Table 2 lists the descriptive statistics of dependent variables for all
experiment groups and Table 3 shows the results of a two-way
ANOVA with resale possibility and resale price as the independent
variables and intention to purchase as the dependent variable There
were signi1047297cant interaction effects (F =136 pb 001) which implies
that the effect of ERRP on purchase intention may be moderated by
perceived resale possibility
In support of H5a participants with a perception of extremely low
resale possibility showed the same level of purchase intention under
both low and high ERRP situations (t =088 p =038) And in support
of H5b participants who perceived an extremely high resalepossibility showed a higher purchase intention when stimulated
with a high ERRP (t =5485 pb 001) See Fig 1
In Study 2 ERRPs did not have a signi1047297cant effect on purchase
intention when consumers did not see a future resale bene1047297t for the
item In other words consumers are in1047298uenced by ERRPs only when
resale feasibility is high The results also indicate that a simple
anchoringeffect did not cause theincreased purchase intentionwith a
higher ERRP in Study 1 if it had it would have been present and thus
would have in1047298uenced purchase intention when the resale possibility
was extremely low in Study 2 This conclusion is reinforced by the
results indicating that the mean purchase intention in the extremely
low resale possibility groups of Study 2 was signi1047297cantly lower than
that of the low resale awareness group in Study 1 (M =264 vs 331
t =minus468 pb 001) This demonstrates that consumers are concerned
about the resale result and may feel disappointed about the failure of
an expected resale once their resale awareness is triggered
5 Discussion
Our results indicate that online resale awareness can signi1047297cantly
in1047298uence a consumers buying intentionprior to a purchase Informing
consumers about their future chances to resell a good prompts theirawareness and expectations for online resale which in turn enhances
their intentionto purchase thegood Therefore we suggest that online
resale awareness and expectations are important factors affecting both
purchasing and reselling behaviors
In addition once consumers have developed online resale aware-
ness their intention to purchase a good is affected by the ERRP level
The higher the perceived future resale price the more willing
consumers are to buy an item This implies that product preference
is determined not only by personal taste and product attributes but
also by the chances and outcome of the future resale Further we
discovered that aside from listing the acquisition price of a good
payment perception and estimated resale return in particular had the
greatest in1047298uence on purchase intention and resale plans These two
constructs are closely associated with the concepts of mental depre-ciation (Heath and Fennema 1996) and mental book value (Okada
2001) To be more speci1047297c a high ERRP signals a lower depreciation
rate a higherresale return anda lower acquisition cost of a good thus
making the good more desirable to purchase
Finally the mediating effect of estimated resale return between
ERRP and purchase intention suggests that consumers integrate
mixed gains (Thaler 1985 1999) by combining events subjectively to
boost perceived utility or to justify their purchase (Kivetz 1999
Sha1047297r et al 1993 Strahilevitz and Myers 1998) The present study
did not require participants to have online resale experience which
implies that consumers in general even those without such ex-
perience or plans to resell possessions online prefer products with a
higher resale price This indicates that a higher resale price may be an
important product attribute for consumers with resale awareness
Table 2
Descriptive statistics of Study 2
Resale possibility Resale reference
price
Numbers of
participants
Intention to
purchase
Mean S D
Extremely low online
resale possibility
Low ERRP 110 256 132
High ERRP 110 271 113
Total 220 264 123
Extremely high online
resale possibility
Low ERRP 110 343 151
High ERRP 110 454 149
Total 220 398 160
Total Low ERRP 220 300 148
High ERRP 220 362 160
Total 440 331 157
Abbreviations ERRP external resale reference price SD standard deviation
Table 3
Summary of ANOVA test of Study 2
Source Mean square F
Resale possibility 199127 106134
ERRP 43282 23069
Resale possibilityERRP 25536 13611
Abbreviations ERRP external resale reference price
Note Signi1047297cant at pb0001
Note
Signi1047297cant at pb
0001
Fig 1 Interaction effects of resale possibility and externalresale reference price(ERRP)
1077H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
httpslidepdfcomreaderfullbuying-while-expecting-to-sell-the-economic-psychology-of-online-resale 66
Finally the results of Study 2 con1047297rm that a mental evaluation process
about the bene1047297ts and costs of acquiring a product and not an
anchoring effect causes the observed effects of ERRPs and that the
failure of an expected resale may cause discon1047297rmation and thus
decrease purchase intention
6 Managerial implications
Our results imply that consumers who intend to resell online mayperceive lower purchase risk than those who intend only to buy They
are also more willing to purchase goods that they initially hesitated to
buy when they are aware that they can resell the goods they 1047297nd
unsatisfactory We suggest that marketers should consider the
changes brought about by the online secondary market in particular
the potential link between a new product and these secondary
markets (Purohit 1992 Zhao and Jagpal 2006) Whereas the
speculated cannibalization effect predicts that the C2C online auction
market may steal some sales from retailers the actions of online
auction sites that resell goods consumers do not want may actually
lead to increased sales of new products by retailers ( Paden and Stell
2005) Thus marketers should look favorably upon and implement
strategies to exploit secondary markets
7 Limitations and future research
Thepresent study has some limitations First all of the participants
were from the same online community in Taiwan More online and
of 1047298ine participants even persons from traditional secondary markets
should be tested to gain a deeper understanding of consumer pur-
chasing and resale behavior In addition we conducted the study in a
Chinese context and thus additional research is needed to investigate
consumer online resale behavior in other contexts As Chu and Liao
(2008) noted the product personal characteristics of the consumer
and situational factors can all in1047298uence consumer resale decisions
Thus future studies should include a wider range of products with
different characteristics participants with different levels of resale
experience and a variety of decision situations to further generalize
and con1047297rm the robustness of our 1047297ndings Finally ERRP is an im-portant factor that affects consumer online resale decisions Increas-
ing the number of different ERRP levels and enabling comparisons
among them could provide a more complete understanding of con-
sumer resale behavior The relationship between IRRPs and ERRPs as
well as how consumers determine resale prices is another potential
topic for further research
References
Baron RM Kenny DA The moderator-mediator variable distinction in social psycho-logical research conceptual strategic and statistical considerations J Pers SocPsychol 198651(6)1173ndash82
Belk RW Possessions and the extended self J Consum Res 198815(2)130ndash68Chandrashekaran R Grewal D Anchoring effects of advertised reference price and sale
price themoderatingrole of saving presentationformat J Bus Res200659(10ndash11)
1063ndash71Chu H Liao S Exploring consumer resale behavior in C2C online auctions taxonomy
and in1047298uences on consumer decisions Acad Mark Sci Rev 200711(3)1-27Chu H Liao S Toward a conceptual model of consumer online resale behavior an
exploratory study in Taiwan J Internet Commerce 20087(2)220ndash52Einhorn H Hogarth R Decision making under ambiguity J Bus 198659(4)225 ndash50Gourville JT Soman D Payment depreciation the behavioral effects of temporally
separating payments from consumption J Consum Res 199825(2)160ndash74Ha HH Hyun JS Pae JH Consumers mental accounting in response to unexpected price
savings at the point of sale Mark Intell Plann 200624(4)406ndash16
Heath C Fennema MG Mental depreciation and marginal decision making OrganBehav Hum Decis Process 199668(2)95-108
Heath C Soll JB Mental budgeting and consumer decisions J Consum Res 199623(1)40ndash52
Heath T Chatterjee S France K Mental accounting and changes in price the framedependence of reference dependence J Consum Res 199522(1)90ndash7
Herrmann GM Garage sales makes good neighbors building community throughneighborhood sales Hum Organ 200665(2)181ndash91
Herrmann GM Soiffer SM For fun and pro1047297t an analysis of the American garage saleUrban Life 198412(4)397ndash421
Kahneman D Tversky A Prospect theory an analysis of decision under risk
Econometrica 197947(2)263ndash
91Kahneman D Tversky A Choices value and frames Am Psychol 198339(4)341 ndash50Kalyanaram G Winer RS Empirical generalizations fromreference priceresearch Mark
Sci 199514(3)161ndash9Kamins MA Dreze X Folkes VS Effects of seller-supplied prices on buyers product
evaluationreferenceprices in an internet auction context J ConsumRes 200430(4)622ndash8
Kim HM The effect of salience on mental accounting how integration versus segrega-tion of payment in1047298uences purchase decisions J Behav Decis Making 200619(4)381ndash91
Kivetz R Advances in research on mental accounting and reason-based choice MarkLett 199910(3)249ndash66
Lattin JM Bucklin RE Reference effects of price and promotion on brand choicebehavior J Mark Res 198926(3)299ndash310
Lichtenstein DR Bearden WO An investigation of consumer evaluations of referenceprice discount claims J Bus Res 198817(2)189ndash200
Linville PW Fischer GW Preferences for separating or combining events J Pers SocPsychol 199160(1)5-23
Monroe KB Lee AY Remembering versus knowingissues in buyers processing of price
information J Acad Mark Sci 199927(2)207ndash25Moon S Voss G How do price range shoppers differ from reference price point
shoppers J Bus Res 200962(1)31ndash8Nunes J Boatwright P Incidental prices and their effect on willingness to pay J Mark
Res 200441(4)457ndash66Okada EM Trade-ins mental accounting and product replacement decisions J Consum
Res 200127(4)433ndash46Paden N Stell R Consumer product redistribution disposition decisions and channel
options J Mark Channels 200512(3)105ndash23Prelec D Loewenstein G The red and the black mental accounting of savings and debt
Mark Sci 199817(1)4-28Purohit D Exploring the relationship between the markets for new and used durable
goods the case of automobiles Mark Sci 199211(2)154ndash67Purohit D Playing theroleof buyerand seller the mental accounting oftrade-ins Mark
Lett 19956(2)101ndash10Rajendran KN Tellis GJ Contextual and temporal components of reference price J Mark
199458(1)22ndash34Sha1047297r E Simonson I Tversky A Reason-based choice Cognit 199349(12)11ndash36Sha1047297r E Thaler RH Invest now drink later spend never on the mental accounting of
delayed consumption J Econ Psychol 200627(5)694ndash712Sherry Jr JF A sociocultural analysis of a midwestern American 1047298ea market J Consum
Res 199017(1)13ndash30Strahilevitz MA Myers JG Donations to charity as purchase incentives how well they
work maydepend onwhatyou aretryingto sell J ConsumRes 199824(4)434ndash46Thaler RHTowardsa positivetheoryof consumerchoice J EconBehavOrgan19801(1)
39ndash60Thaler RH Mental accounting and consumer choice Mark Sci 19854(3)199ndash214Thaler RH Mental accounting matters J Behav Decis Making 199912(3)183ndash206Thaler RH Johnson EJ Gambling with the house money and trying to break even the
effects of prior outcomes on risky choice Manage Sci 199036(6)643ndash60Tversky A Kahneman D Judgment under uncertainty heuristics and biases Sci
1974185(4157)1124ndash31Tversky A Kahneman D The framing of decisions and the psychology of choice Sci
1981211(4481)453ndash8Tversky A Kahneman D Loss aversion in riskless choice a reference-dependent model
Quart J Econ 1991106(4)1039ndash61Urbany JE Bearden WO Weilbaker DC The effect of plausible and exaggerated refer-
ence prices on consumer perceptions and price search J Consum Res 198815(1)95-111
Winer RS A reference price model of brand choice for frequently purchased products J Consum Res 198613(2)250ndash6
Winer RS A multi-stage model of choice incorporating reference prices Mark Lett19891(1)27ndash36
Yam Survey (2006) httptaiwanyamorgtwsurvey Zhao H Jagpal S The effect of secondhand markets on the 1047297rms dynamic pricing and
new product introduction Int J Res Mark 200623(3)295ndash307
1078 H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
httpslidepdfcomreaderfullbuying-while-expecting-to-sell-the-economic-psychology-of-online-resale 46
compensated fortheir participation in thestudy with 30 virtual points
(approximately NT$30) which they could spend on gifts or for Web
site services The research was limited to C2C online auctions but
individuals who had never resold anything via an online auction were
allowed to participate The wording we used to describe an intention
to purchase would be clear to anyone with a basic understanding of
C2C online auctions To improve reliability each subject was allowed
to complete only one questionnaire using the Web site system
controlAll participants read a description of a purchase decision about a
new mobile phone costing NT$10000 The low-awareness group read
a scenario indicating that the possibility of reselling the new mobile
phone online after acquiring it was low The high-awareness groups
read one of three different scenarios all of which indicated that the
possibility of reselling the new mobile phone was high Each scenario
in the high-awareness groups offered a different ERRP as described
previously Finally we asked the participants in all four groups to rate
their intention to purchase the new mobile phone using a 7-point
Likert scale In addition we asked the high-awareness groups to
estimate the online resale return and the perceived purchase
payment The results of the manipulation check to con1047297rm if the
provided scenarios of online resale awareness and ERRPs were
well received showed that all of the manipulations were enacted as
intended
32 Results
Table 1 lists the descriptive statistics of dependent variables for all
experimental groups A t -test conducted on intention to purchase
yielded a signi1047297cant difference between the low- and high-awareness
groups (t =minus451 pb 001) This result supports H1 that consumers
with high online resale awareness will have a greater intent to
purchase
A one-way ANOVA conducted on intention to purchase among
the three high-awareness groups revealed signi1047297cant between-
group differences (F =162 p b 001) A Scheffe post-hoc test further
demonstrated signi1047297cant mean differences among the groups (HighN
MediumNLow psb 05) Thus as predicted H2 is supported by theresults among consumers who have high online resale awareness for
a particular product a higher ERRP led to a greater intent to purchase
To examine H3 we performed a one-way ANOVA on the estimated
resale return ratings of the three high-awareness groups There was a
signi1047297cant between-group effect (F =167631 pb 001) which we
con1047297rmed by signi1047297cant Scheffe post-hoc tests (HighNMediumNLow
psb 001) Hence among consumers with high online resale aware-
ness the higher the ERRP the higher the estimated resale return
Next we conducted a simple regression analysis to test the rela-
tionship between estimated resale return and intention to purchase
As expected purchase intention was positively related to estimated
resale return ( β =329 pb 001) To test the mediating effect of esti-
mated resale return we followed a three-step procedure suggestedby
Baron and Kenny (1986) A mediating effect can be assumed if the
following criteria are met (1) there is a signi1047297cant relationship
between the independent (ERRPs) and dependent (intention to
purchase) variables (2) there is a signi1047297cant relationship between the
independent variable (ERRPs) and the mediator (estimated resale
return) and (3) the effect of the independent variable (ERRPs) on the
dependent variable (intention to purchase) is signi1047297
cantly reducedafter the mediator (estimated resale return) is added to the equation
The regression analyses demonstrated a complete mediating effect of
estimated resale return as (1) ERRP had a signi1047297cantly positive effect
on purchase intention ( β =289 pb 001) (2) estimated resale return
had a signi1047297cantly positive effect on purchase intention ( β =329
pb 001) and (3) β (117) for ERRP in the multiple regression model
was no longer signi1047297cant ( p =094N 05) whereas β (247) for the
estimated resale return remained signi1047297cant ( pb 001) In addition a
Sobel test was signi1047297cant (Sobel test statistic=268 pb 01) suggest-
ing that estimated resale return mediated the main effect of ERRP on
purchase intention Thus the statistical evidence supports H3
A one-way ANOVA performed to test H4 revealed a signi1047297cant
between-group effect on perceived purchase payment among the
three high-awareness groups (F =10322 p b 001) Scheffe post-hoc
tests (HighbMediumbLow psb 001) con1047297rmed this result Accord-
ingly among consumers with high online resale awareness the
higherthe ERRP the lower the perceived purchase payment Next we
calculated a simple regression to determine the relationship between
perceived purchase payment and intention to purchase As expected
there was a negative relationship between purchase intention and
perceived purchase payment ( β =minus 201 pb 001) indicating that
the higher the perceived purchase payment the lower the intention
to buy We applied the same three-step procedure (Baron and
Kenny 1986) described for H3 to test the mediating effect of
perceived purchase payment for H4 The results showed no signi1047297cant
mediating effect of perceived purchase payment between ERRP and
purchase intention as β for ERRP in the multiple regression model
remained signi1047297cant ( β =26 pb 001) after perceived purchase
payment was included in the equation whereas β for perceived pur-chase payment was insigni1047297cant ( β =minus 05 p =41N 05) Thus H4 is
only partially supported because perceived purchase payment did not
mediate the main effect of ERRP on purchase intention
Comparing this insigni1047297cant result (H4) to the substantiated
mediating effect of estimated resale return (H3) payment perception
did not in1047298uence the relationship between ERRP and purchase
intention as much as did estimated resale return during consumers
subjective evaluations of online resale This implies that consumers
1047297nd it dif 1047297cult to deduce the net purchase payment based on ERRP
cues That is they feel a strong loss of money upon making a payment
which cannot be resolved by expected return in the future In other
words they do not equate the resale value of possessions with cash
Therefore the increased purchase intention is derived mainly by a
higher net gain perception based on estimated resale return This mayexplain why there was no mediating effect of perceived purchase
payment
4 Study 2
41 Method
We conducted Study 2 to con1047297rm that the effect of ERRPs on
consumers intention to purchase did not derive from an anchoring
effect but rather a mental accounting effect For the experiment we
used a 2 (extremely low resale possibility vs extremely high resale
possibility)times2 (low vs high ERRP) between-subjects design admin-
istered on the Youthwant online community We replicated the pro-
cedure of Study 1 but manipulated four different purchase scenarios
Table 1Descriptive statistics of Study 1
Numbers of
participants
Intention to
purchase
Estimated
resale return
Perceived
payment
Mean S D Mean S D Mean S D
Low online
resale
awareness
120 331 133 NA
High online
resale
awareness
357 401 153 5 47713 274868 4610 94 349356
Low ERRP 118 3 46 153 3 16525 130387 715847 156081
Medium
ERRP
119 403 129 5 37552 150885 4741 03 363620
High ERRP 120 4 54 158 785123 2 77116 1 97686 2 74907
Abbreviations ERRP external resale reference price SD standard deviation
1076 H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
httpslidepdfcomreaderfullbuying-while-expecting-to-sell-the-economic-psychology-of-online-resale 56
to test interaction effects We organized the questionnaire as follows
After reading the same online purchase scenarios for a cell phone we
informed participants that the chance to resell the cell phone online
successfully was either ldquoextremely lowrdquo or ldquoextremely highrdquo The
questionnaire emphasized this wording to ensure that participants
perceived the manipulation of resale possibility strongly and clearly
To con1047297rm we performed manipulation checks to ask participants to
assess their perception using a 7-point Likert scale of the chance to
resell the target item successfully with 1 being extremely low and 7
being extremely high The group that showed high resale possibility
had a higher perception of resale likelihood than the low-possibility
group (M = 648 vs 166 t =minus797 pb 001) Following this exercise
we gave these participants purchase scenarios for a low ERRP (NT
$3000) and a high ERRP (NT$9000) respectively as a second test of
manipulating factors Finally we queried each groups intention to
purchase the cell phone In Study 2 the sample consisted of 440
participants with an average age of 24 years There were 110 subjects
in each group Of the total 54 were high school students 189 were
undergraduate or graduate college students and 197 were not
students Among the 440 participants 287 had online resale experi-
ence and 153 did not All of the participants were registered members
of Youthwant and had not participated in previous experiments
42 Results
Table 2 lists the descriptive statistics of dependent variables for all
experiment groups and Table 3 shows the results of a two-way
ANOVA with resale possibility and resale price as the independent
variables and intention to purchase as the dependent variable There
were signi1047297cant interaction effects (F =136 pb 001) which implies
that the effect of ERRP on purchase intention may be moderated by
perceived resale possibility
In support of H5a participants with a perception of extremely low
resale possibility showed the same level of purchase intention under
both low and high ERRP situations (t =088 p =038) And in support
of H5b participants who perceived an extremely high resalepossibility showed a higher purchase intention when stimulated
with a high ERRP (t =5485 pb 001) See Fig 1
In Study 2 ERRPs did not have a signi1047297cant effect on purchase
intention when consumers did not see a future resale bene1047297t for the
item In other words consumers are in1047298uenced by ERRPs only when
resale feasibility is high The results also indicate that a simple
anchoringeffect did not cause theincreased purchase intentionwith a
higher ERRP in Study 1 if it had it would have been present and thus
would have in1047298uenced purchase intention when the resale possibility
was extremely low in Study 2 This conclusion is reinforced by the
results indicating that the mean purchase intention in the extremely
low resale possibility groups of Study 2 was signi1047297cantly lower than
that of the low resale awareness group in Study 1 (M =264 vs 331
t =minus468 pb 001) This demonstrates that consumers are concerned
about the resale result and may feel disappointed about the failure of
an expected resale once their resale awareness is triggered
5 Discussion
Our results indicate that online resale awareness can signi1047297cantly
in1047298uence a consumers buying intentionprior to a purchase Informing
consumers about their future chances to resell a good prompts theirawareness and expectations for online resale which in turn enhances
their intentionto purchase thegood Therefore we suggest that online
resale awareness and expectations are important factors affecting both
purchasing and reselling behaviors
In addition once consumers have developed online resale aware-
ness their intention to purchase a good is affected by the ERRP level
The higher the perceived future resale price the more willing
consumers are to buy an item This implies that product preference
is determined not only by personal taste and product attributes but
also by the chances and outcome of the future resale Further we
discovered that aside from listing the acquisition price of a good
payment perception and estimated resale return in particular had the
greatest in1047298uence on purchase intention and resale plans These two
constructs are closely associated with the concepts of mental depre-ciation (Heath and Fennema 1996) and mental book value (Okada
2001) To be more speci1047297c a high ERRP signals a lower depreciation
rate a higherresale return anda lower acquisition cost of a good thus
making the good more desirable to purchase
Finally the mediating effect of estimated resale return between
ERRP and purchase intention suggests that consumers integrate
mixed gains (Thaler 1985 1999) by combining events subjectively to
boost perceived utility or to justify their purchase (Kivetz 1999
Sha1047297r et al 1993 Strahilevitz and Myers 1998) The present study
did not require participants to have online resale experience which
implies that consumers in general even those without such ex-
perience or plans to resell possessions online prefer products with a
higher resale price This indicates that a higher resale price may be an
important product attribute for consumers with resale awareness
Table 2
Descriptive statistics of Study 2
Resale possibility Resale reference
price
Numbers of
participants
Intention to
purchase
Mean S D
Extremely low online
resale possibility
Low ERRP 110 256 132
High ERRP 110 271 113
Total 220 264 123
Extremely high online
resale possibility
Low ERRP 110 343 151
High ERRP 110 454 149
Total 220 398 160
Total Low ERRP 220 300 148
High ERRP 220 362 160
Total 440 331 157
Abbreviations ERRP external resale reference price SD standard deviation
Table 3
Summary of ANOVA test of Study 2
Source Mean square F
Resale possibility 199127 106134
ERRP 43282 23069
Resale possibilityERRP 25536 13611
Abbreviations ERRP external resale reference price
Note Signi1047297cant at pb0001
Note
Signi1047297cant at pb
0001
Fig 1 Interaction effects of resale possibility and externalresale reference price(ERRP)
1077H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
httpslidepdfcomreaderfullbuying-while-expecting-to-sell-the-economic-psychology-of-online-resale 66
Finally the results of Study 2 con1047297rm that a mental evaluation process
about the bene1047297ts and costs of acquiring a product and not an
anchoring effect causes the observed effects of ERRPs and that the
failure of an expected resale may cause discon1047297rmation and thus
decrease purchase intention
6 Managerial implications
Our results imply that consumers who intend to resell online mayperceive lower purchase risk than those who intend only to buy They
are also more willing to purchase goods that they initially hesitated to
buy when they are aware that they can resell the goods they 1047297nd
unsatisfactory We suggest that marketers should consider the
changes brought about by the online secondary market in particular
the potential link between a new product and these secondary
markets (Purohit 1992 Zhao and Jagpal 2006) Whereas the
speculated cannibalization effect predicts that the C2C online auction
market may steal some sales from retailers the actions of online
auction sites that resell goods consumers do not want may actually
lead to increased sales of new products by retailers ( Paden and Stell
2005) Thus marketers should look favorably upon and implement
strategies to exploit secondary markets
7 Limitations and future research
Thepresent study has some limitations First all of the participants
were from the same online community in Taiwan More online and
of 1047298ine participants even persons from traditional secondary markets
should be tested to gain a deeper understanding of consumer pur-
chasing and resale behavior In addition we conducted the study in a
Chinese context and thus additional research is needed to investigate
consumer online resale behavior in other contexts As Chu and Liao
(2008) noted the product personal characteristics of the consumer
and situational factors can all in1047298uence consumer resale decisions
Thus future studies should include a wider range of products with
different characteristics participants with different levels of resale
experience and a variety of decision situations to further generalize
and con1047297rm the robustness of our 1047297ndings Finally ERRP is an im-portant factor that affects consumer online resale decisions Increas-
ing the number of different ERRP levels and enabling comparisons
among them could provide a more complete understanding of con-
sumer resale behavior The relationship between IRRPs and ERRPs as
well as how consumers determine resale prices is another potential
topic for further research
References
Baron RM Kenny DA The moderator-mediator variable distinction in social psycho-logical research conceptual strategic and statistical considerations J Pers SocPsychol 198651(6)1173ndash82
Belk RW Possessions and the extended self J Consum Res 198815(2)130ndash68Chandrashekaran R Grewal D Anchoring effects of advertised reference price and sale
price themoderatingrole of saving presentationformat J Bus Res200659(10ndash11)
1063ndash71Chu H Liao S Exploring consumer resale behavior in C2C online auctions taxonomy
and in1047298uences on consumer decisions Acad Mark Sci Rev 200711(3)1-27Chu H Liao S Toward a conceptual model of consumer online resale behavior an
exploratory study in Taiwan J Internet Commerce 20087(2)220ndash52Einhorn H Hogarth R Decision making under ambiguity J Bus 198659(4)225 ndash50Gourville JT Soman D Payment depreciation the behavioral effects of temporally
separating payments from consumption J Consum Res 199825(2)160ndash74Ha HH Hyun JS Pae JH Consumers mental accounting in response to unexpected price
savings at the point of sale Mark Intell Plann 200624(4)406ndash16
Heath C Fennema MG Mental depreciation and marginal decision making OrganBehav Hum Decis Process 199668(2)95-108
Heath C Soll JB Mental budgeting and consumer decisions J Consum Res 199623(1)40ndash52
Heath T Chatterjee S France K Mental accounting and changes in price the framedependence of reference dependence J Consum Res 199522(1)90ndash7
Herrmann GM Garage sales makes good neighbors building community throughneighborhood sales Hum Organ 200665(2)181ndash91
Herrmann GM Soiffer SM For fun and pro1047297t an analysis of the American garage saleUrban Life 198412(4)397ndash421
Kahneman D Tversky A Prospect theory an analysis of decision under risk
Econometrica 197947(2)263ndash
91Kahneman D Tversky A Choices value and frames Am Psychol 198339(4)341 ndash50Kalyanaram G Winer RS Empirical generalizations fromreference priceresearch Mark
Sci 199514(3)161ndash9Kamins MA Dreze X Folkes VS Effects of seller-supplied prices on buyers product
evaluationreferenceprices in an internet auction context J ConsumRes 200430(4)622ndash8
Kim HM The effect of salience on mental accounting how integration versus segrega-tion of payment in1047298uences purchase decisions J Behav Decis Making 200619(4)381ndash91
Kivetz R Advances in research on mental accounting and reason-based choice MarkLett 199910(3)249ndash66
Lattin JM Bucklin RE Reference effects of price and promotion on brand choicebehavior J Mark Res 198926(3)299ndash310
Lichtenstein DR Bearden WO An investigation of consumer evaluations of referenceprice discount claims J Bus Res 198817(2)189ndash200
Linville PW Fischer GW Preferences for separating or combining events J Pers SocPsychol 199160(1)5-23
Monroe KB Lee AY Remembering versus knowingissues in buyers processing of price
information J Acad Mark Sci 199927(2)207ndash25Moon S Voss G How do price range shoppers differ from reference price point
shoppers J Bus Res 200962(1)31ndash8Nunes J Boatwright P Incidental prices and their effect on willingness to pay J Mark
Res 200441(4)457ndash66Okada EM Trade-ins mental accounting and product replacement decisions J Consum
Res 200127(4)433ndash46Paden N Stell R Consumer product redistribution disposition decisions and channel
options J Mark Channels 200512(3)105ndash23Prelec D Loewenstein G The red and the black mental accounting of savings and debt
Mark Sci 199817(1)4-28Purohit D Exploring the relationship between the markets for new and used durable
goods the case of automobiles Mark Sci 199211(2)154ndash67Purohit D Playing theroleof buyerand seller the mental accounting oftrade-ins Mark
Lett 19956(2)101ndash10Rajendran KN Tellis GJ Contextual and temporal components of reference price J Mark
199458(1)22ndash34Sha1047297r E Simonson I Tversky A Reason-based choice Cognit 199349(12)11ndash36Sha1047297r E Thaler RH Invest now drink later spend never on the mental accounting of
delayed consumption J Econ Psychol 200627(5)694ndash712Sherry Jr JF A sociocultural analysis of a midwestern American 1047298ea market J Consum
Res 199017(1)13ndash30Strahilevitz MA Myers JG Donations to charity as purchase incentives how well they
work maydepend onwhatyou aretryingto sell J ConsumRes 199824(4)434ndash46Thaler RHTowardsa positivetheoryof consumerchoice J EconBehavOrgan19801(1)
39ndash60Thaler RH Mental accounting and consumer choice Mark Sci 19854(3)199ndash214Thaler RH Mental accounting matters J Behav Decis Making 199912(3)183ndash206Thaler RH Johnson EJ Gambling with the house money and trying to break even the
effects of prior outcomes on risky choice Manage Sci 199036(6)643ndash60Tversky A Kahneman D Judgment under uncertainty heuristics and biases Sci
1974185(4157)1124ndash31Tversky A Kahneman D The framing of decisions and the psychology of choice Sci
1981211(4481)453ndash8Tversky A Kahneman D Loss aversion in riskless choice a reference-dependent model
Quart J Econ 1991106(4)1039ndash61Urbany JE Bearden WO Weilbaker DC The effect of plausible and exaggerated refer-
ence prices on consumer perceptions and price search J Consum Res 198815(1)95-111
Winer RS A reference price model of brand choice for frequently purchased products J Consum Res 198613(2)250ndash6
Winer RS A multi-stage model of choice incorporating reference prices Mark Lett19891(1)27ndash36
Yam Survey (2006) httptaiwanyamorgtwsurvey Zhao H Jagpal S The effect of secondhand markets on the 1047297rms dynamic pricing and
new product introduction Int J Res Mark 200623(3)295ndash307
1078 H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
httpslidepdfcomreaderfullbuying-while-expecting-to-sell-the-economic-psychology-of-online-resale 56
to test interaction effects We organized the questionnaire as follows
After reading the same online purchase scenarios for a cell phone we
informed participants that the chance to resell the cell phone online
successfully was either ldquoextremely lowrdquo or ldquoextremely highrdquo The
questionnaire emphasized this wording to ensure that participants
perceived the manipulation of resale possibility strongly and clearly
To con1047297rm we performed manipulation checks to ask participants to
assess their perception using a 7-point Likert scale of the chance to
resell the target item successfully with 1 being extremely low and 7
being extremely high The group that showed high resale possibility
had a higher perception of resale likelihood than the low-possibility
group (M = 648 vs 166 t =minus797 pb 001) Following this exercise
we gave these participants purchase scenarios for a low ERRP (NT
$3000) and a high ERRP (NT$9000) respectively as a second test of
manipulating factors Finally we queried each groups intention to
purchase the cell phone In Study 2 the sample consisted of 440
participants with an average age of 24 years There were 110 subjects
in each group Of the total 54 were high school students 189 were
undergraduate or graduate college students and 197 were not
students Among the 440 participants 287 had online resale experi-
ence and 153 did not All of the participants were registered members
of Youthwant and had not participated in previous experiments
42 Results
Table 2 lists the descriptive statistics of dependent variables for all
experiment groups and Table 3 shows the results of a two-way
ANOVA with resale possibility and resale price as the independent
variables and intention to purchase as the dependent variable There
were signi1047297cant interaction effects (F =136 pb 001) which implies
that the effect of ERRP on purchase intention may be moderated by
perceived resale possibility
In support of H5a participants with a perception of extremely low
resale possibility showed the same level of purchase intention under
both low and high ERRP situations (t =088 p =038) And in support
of H5b participants who perceived an extremely high resalepossibility showed a higher purchase intention when stimulated
with a high ERRP (t =5485 pb 001) See Fig 1
In Study 2 ERRPs did not have a signi1047297cant effect on purchase
intention when consumers did not see a future resale bene1047297t for the
item In other words consumers are in1047298uenced by ERRPs only when
resale feasibility is high The results also indicate that a simple
anchoringeffect did not cause theincreased purchase intentionwith a
higher ERRP in Study 1 if it had it would have been present and thus
would have in1047298uenced purchase intention when the resale possibility
was extremely low in Study 2 This conclusion is reinforced by the
results indicating that the mean purchase intention in the extremely
low resale possibility groups of Study 2 was signi1047297cantly lower than
that of the low resale awareness group in Study 1 (M =264 vs 331
t =minus468 pb 001) This demonstrates that consumers are concerned
about the resale result and may feel disappointed about the failure of
an expected resale once their resale awareness is triggered
5 Discussion
Our results indicate that online resale awareness can signi1047297cantly
in1047298uence a consumers buying intentionprior to a purchase Informing
consumers about their future chances to resell a good prompts theirawareness and expectations for online resale which in turn enhances
their intentionto purchase thegood Therefore we suggest that online
resale awareness and expectations are important factors affecting both
purchasing and reselling behaviors
In addition once consumers have developed online resale aware-
ness their intention to purchase a good is affected by the ERRP level
The higher the perceived future resale price the more willing
consumers are to buy an item This implies that product preference
is determined not only by personal taste and product attributes but
also by the chances and outcome of the future resale Further we
discovered that aside from listing the acquisition price of a good
payment perception and estimated resale return in particular had the
greatest in1047298uence on purchase intention and resale plans These two
constructs are closely associated with the concepts of mental depre-ciation (Heath and Fennema 1996) and mental book value (Okada
2001) To be more speci1047297c a high ERRP signals a lower depreciation
rate a higherresale return anda lower acquisition cost of a good thus
making the good more desirable to purchase
Finally the mediating effect of estimated resale return between
ERRP and purchase intention suggests that consumers integrate
mixed gains (Thaler 1985 1999) by combining events subjectively to
boost perceived utility or to justify their purchase (Kivetz 1999
Sha1047297r et al 1993 Strahilevitz and Myers 1998) The present study
did not require participants to have online resale experience which
implies that consumers in general even those without such ex-
perience or plans to resell possessions online prefer products with a
higher resale price This indicates that a higher resale price may be an
important product attribute for consumers with resale awareness
Table 2
Descriptive statistics of Study 2
Resale possibility Resale reference
price
Numbers of
participants
Intention to
purchase
Mean S D
Extremely low online
resale possibility
Low ERRP 110 256 132
High ERRP 110 271 113
Total 220 264 123
Extremely high online
resale possibility
Low ERRP 110 343 151
High ERRP 110 454 149
Total 220 398 160
Total Low ERRP 220 300 148
High ERRP 220 362 160
Total 440 331 157
Abbreviations ERRP external resale reference price SD standard deviation
Table 3
Summary of ANOVA test of Study 2
Source Mean square F
Resale possibility 199127 106134
ERRP 43282 23069
Resale possibilityERRP 25536 13611
Abbreviations ERRP external resale reference price
Note Signi1047297cant at pb0001
Note
Signi1047297cant at pb
0001
Fig 1 Interaction effects of resale possibility and externalresale reference price(ERRP)
1077H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
httpslidepdfcomreaderfullbuying-while-expecting-to-sell-the-economic-psychology-of-online-resale 66
Finally the results of Study 2 con1047297rm that a mental evaluation process
about the bene1047297ts and costs of acquiring a product and not an
anchoring effect causes the observed effects of ERRPs and that the
failure of an expected resale may cause discon1047297rmation and thus
decrease purchase intention
6 Managerial implications
Our results imply that consumers who intend to resell online mayperceive lower purchase risk than those who intend only to buy They
are also more willing to purchase goods that they initially hesitated to
buy when they are aware that they can resell the goods they 1047297nd
unsatisfactory We suggest that marketers should consider the
changes brought about by the online secondary market in particular
the potential link between a new product and these secondary
markets (Purohit 1992 Zhao and Jagpal 2006) Whereas the
speculated cannibalization effect predicts that the C2C online auction
market may steal some sales from retailers the actions of online
auction sites that resell goods consumers do not want may actually
lead to increased sales of new products by retailers ( Paden and Stell
2005) Thus marketers should look favorably upon and implement
strategies to exploit secondary markets
7 Limitations and future research
Thepresent study has some limitations First all of the participants
were from the same online community in Taiwan More online and
of 1047298ine participants even persons from traditional secondary markets
should be tested to gain a deeper understanding of consumer pur-
chasing and resale behavior In addition we conducted the study in a
Chinese context and thus additional research is needed to investigate
consumer online resale behavior in other contexts As Chu and Liao
(2008) noted the product personal characteristics of the consumer
and situational factors can all in1047298uence consumer resale decisions
Thus future studies should include a wider range of products with
different characteristics participants with different levels of resale
experience and a variety of decision situations to further generalize
and con1047297rm the robustness of our 1047297ndings Finally ERRP is an im-portant factor that affects consumer online resale decisions Increas-
ing the number of different ERRP levels and enabling comparisons
among them could provide a more complete understanding of con-
sumer resale behavior The relationship between IRRPs and ERRPs as
well as how consumers determine resale prices is another potential
topic for further research
References
Baron RM Kenny DA The moderator-mediator variable distinction in social psycho-logical research conceptual strategic and statistical considerations J Pers SocPsychol 198651(6)1173ndash82
Belk RW Possessions and the extended self J Consum Res 198815(2)130ndash68Chandrashekaran R Grewal D Anchoring effects of advertised reference price and sale
price themoderatingrole of saving presentationformat J Bus Res200659(10ndash11)
1063ndash71Chu H Liao S Exploring consumer resale behavior in C2C online auctions taxonomy
and in1047298uences on consumer decisions Acad Mark Sci Rev 200711(3)1-27Chu H Liao S Toward a conceptual model of consumer online resale behavior an
exploratory study in Taiwan J Internet Commerce 20087(2)220ndash52Einhorn H Hogarth R Decision making under ambiguity J Bus 198659(4)225 ndash50Gourville JT Soman D Payment depreciation the behavioral effects of temporally
separating payments from consumption J Consum Res 199825(2)160ndash74Ha HH Hyun JS Pae JH Consumers mental accounting in response to unexpected price
savings at the point of sale Mark Intell Plann 200624(4)406ndash16
Heath C Fennema MG Mental depreciation and marginal decision making OrganBehav Hum Decis Process 199668(2)95-108
Heath C Soll JB Mental budgeting and consumer decisions J Consum Res 199623(1)40ndash52
Heath T Chatterjee S France K Mental accounting and changes in price the framedependence of reference dependence J Consum Res 199522(1)90ndash7
Herrmann GM Garage sales makes good neighbors building community throughneighborhood sales Hum Organ 200665(2)181ndash91
Herrmann GM Soiffer SM For fun and pro1047297t an analysis of the American garage saleUrban Life 198412(4)397ndash421
Kahneman D Tversky A Prospect theory an analysis of decision under risk
Econometrica 197947(2)263ndash
91Kahneman D Tversky A Choices value and frames Am Psychol 198339(4)341 ndash50Kalyanaram G Winer RS Empirical generalizations fromreference priceresearch Mark
Sci 199514(3)161ndash9Kamins MA Dreze X Folkes VS Effects of seller-supplied prices on buyers product
evaluationreferenceprices in an internet auction context J ConsumRes 200430(4)622ndash8
Kim HM The effect of salience on mental accounting how integration versus segrega-tion of payment in1047298uences purchase decisions J Behav Decis Making 200619(4)381ndash91
Kivetz R Advances in research on mental accounting and reason-based choice MarkLett 199910(3)249ndash66
Lattin JM Bucklin RE Reference effects of price and promotion on brand choicebehavior J Mark Res 198926(3)299ndash310
Lichtenstein DR Bearden WO An investigation of consumer evaluations of referenceprice discount claims J Bus Res 198817(2)189ndash200
Linville PW Fischer GW Preferences for separating or combining events J Pers SocPsychol 199160(1)5-23
Monroe KB Lee AY Remembering versus knowingissues in buyers processing of price
information J Acad Mark Sci 199927(2)207ndash25Moon S Voss G How do price range shoppers differ from reference price point
shoppers J Bus Res 200962(1)31ndash8Nunes J Boatwright P Incidental prices and their effect on willingness to pay J Mark
Res 200441(4)457ndash66Okada EM Trade-ins mental accounting and product replacement decisions J Consum
Res 200127(4)433ndash46Paden N Stell R Consumer product redistribution disposition decisions and channel
options J Mark Channels 200512(3)105ndash23Prelec D Loewenstein G The red and the black mental accounting of savings and debt
Mark Sci 199817(1)4-28Purohit D Exploring the relationship between the markets for new and used durable
goods the case of automobiles Mark Sci 199211(2)154ndash67Purohit D Playing theroleof buyerand seller the mental accounting oftrade-ins Mark
Lett 19956(2)101ndash10Rajendran KN Tellis GJ Contextual and temporal components of reference price J Mark
199458(1)22ndash34Sha1047297r E Simonson I Tversky A Reason-based choice Cognit 199349(12)11ndash36Sha1047297r E Thaler RH Invest now drink later spend never on the mental accounting of
delayed consumption J Econ Psychol 200627(5)694ndash712Sherry Jr JF A sociocultural analysis of a midwestern American 1047298ea market J Consum
Res 199017(1)13ndash30Strahilevitz MA Myers JG Donations to charity as purchase incentives how well they
work maydepend onwhatyou aretryingto sell J ConsumRes 199824(4)434ndash46Thaler RHTowardsa positivetheoryof consumerchoice J EconBehavOrgan19801(1)
39ndash60Thaler RH Mental accounting and consumer choice Mark Sci 19854(3)199ndash214Thaler RH Mental accounting matters J Behav Decis Making 199912(3)183ndash206Thaler RH Johnson EJ Gambling with the house money and trying to break even the
effects of prior outcomes on risky choice Manage Sci 199036(6)643ndash60Tversky A Kahneman D Judgment under uncertainty heuristics and biases Sci
1974185(4157)1124ndash31Tversky A Kahneman D The framing of decisions and the psychology of choice Sci
1981211(4481)453ndash8Tversky A Kahneman D Loss aversion in riskless choice a reference-dependent model
Quart J Econ 1991106(4)1039ndash61Urbany JE Bearden WO Weilbaker DC The effect of plausible and exaggerated refer-
ence prices on consumer perceptions and price search J Consum Res 198815(1)95-111
Winer RS A reference price model of brand choice for frequently purchased products J Consum Res 198613(2)250ndash6
Winer RS A multi-stage model of choice incorporating reference prices Mark Lett19891(1)27ndash36
Yam Survey (2006) httptaiwanyamorgtwsurvey Zhao H Jagpal S The effect of secondhand markets on the 1047297rms dynamic pricing and
new product introduction Int J Res Mark 200623(3)295ndash307
1078 H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
8102019 Buying While Expecting to Sell the Economic Psychology of Online Resale
httpslidepdfcomreaderfullbuying-while-expecting-to-sell-the-economic-psychology-of-online-resale 66
Finally the results of Study 2 con1047297rm that a mental evaluation process
about the bene1047297ts and costs of acquiring a product and not an
anchoring effect causes the observed effects of ERRPs and that the
failure of an expected resale may cause discon1047297rmation and thus
decrease purchase intention
6 Managerial implications
Our results imply that consumers who intend to resell online mayperceive lower purchase risk than those who intend only to buy They
are also more willing to purchase goods that they initially hesitated to
buy when they are aware that they can resell the goods they 1047297nd
unsatisfactory We suggest that marketers should consider the
changes brought about by the online secondary market in particular
the potential link between a new product and these secondary
markets (Purohit 1992 Zhao and Jagpal 2006) Whereas the
speculated cannibalization effect predicts that the C2C online auction
market may steal some sales from retailers the actions of online
auction sites that resell goods consumers do not want may actually
lead to increased sales of new products by retailers ( Paden and Stell
2005) Thus marketers should look favorably upon and implement
strategies to exploit secondary markets
7 Limitations and future research
Thepresent study has some limitations First all of the participants
were from the same online community in Taiwan More online and
of 1047298ine participants even persons from traditional secondary markets
should be tested to gain a deeper understanding of consumer pur-
chasing and resale behavior In addition we conducted the study in a
Chinese context and thus additional research is needed to investigate
consumer online resale behavior in other contexts As Chu and Liao
(2008) noted the product personal characteristics of the consumer
and situational factors can all in1047298uence consumer resale decisions
Thus future studies should include a wider range of products with
different characteristics participants with different levels of resale
experience and a variety of decision situations to further generalize
and con1047297rm the robustness of our 1047297ndings Finally ERRP is an im-portant factor that affects consumer online resale decisions Increas-
ing the number of different ERRP levels and enabling comparisons
among them could provide a more complete understanding of con-
sumer resale behavior The relationship between IRRPs and ERRPs as
well as how consumers determine resale prices is another potential
topic for further research
References
Baron RM Kenny DA The moderator-mediator variable distinction in social psycho-logical research conceptual strategic and statistical considerations J Pers SocPsychol 198651(6)1173ndash82
Belk RW Possessions and the extended self J Consum Res 198815(2)130ndash68Chandrashekaran R Grewal D Anchoring effects of advertised reference price and sale
price themoderatingrole of saving presentationformat J Bus Res200659(10ndash11)
1063ndash71Chu H Liao S Exploring consumer resale behavior in C2C online auctions taxonomy
and in1047298uences on consumer decisions Acad Mark Sci Rev 200711(3)1-27Chu H Liao S Toward a conceptual model of consumer online resale behavior an
exploratory study in Taiwan J Internet Commerce 20087(2)220ndash52Einhorn H Hogarth R Decision making under ambiguity J Bus 198659(4)225 ndash50Gourville JT Soman D Payment depreciation the behavioral effects of temporally
separating payments from consumption J Consum Res 199825(2)160ndash74Ha HH Hyun JS Pae JH Consumers mental accounting in response to unexpected price
savings at the point of sale Mark Intell Plann 200624(4)406ndash16
Heath C Fennema MG Mental depreciation and marginal decision making OrganBehav Hum Decis Process 199668(2)95-108
Heath C Soll JB Mental budgeting and consumer decisions J Consum Res 199623(1)40ndash52
Heath T Chatterjee S France K Mental accounting and changes in price the framedependence of reference dependence J Consum Res 199522(1)90ndash7
Herrmann GM Garage sales makes good neighbors building community throughneighborhood sales Hum Organ 200665(2)181ndash91
Herrmann GM Soiffer SM For fun and pro1047297t an analysis of the American garage saleUrban Life 198412(4)397ndash421
Kahneman D Tversky A Prospect theory an analysis of decision under risk
Econometrica 197947(2)263ndash
91Kahneman D Tversky A Choices value and frames Am Psychol 198339(4)341 ndash50Kalyanaram G Winer RS Empirical generalizations fromreference priceresearch Mark
Sci 199514(3)161ndash9Kamins MA Dreze X Folkes VS Effects of seller-supplied prices on buyers product
evaluationreferenceprices in an internet auction context J ConsumRes 200430(4)622ndash8
Kim HM The effect of salience on mental accounting how integration versus segrega-tion of payment in1047298uences purchase decisions J Behav Decis Making 200619(4)381ndash91
Kivetz R Advances in research on mental accounting and reason-based choice MarkLett 199910(3)249ndash66
Lattin JM Bucklin RE Reference effects of price and promotion on brand choicebehavior J Mark Res 198926(3)299ndash310
Lichtenstein DR Bearden WO An investigation of consumer evaluations of referenceprice discount claims J Bus Res 198817(2)189ndash200
Linville PW Fischer GW Preferences for separating or combining events J Pers SocPsychol 199160(1)5-23
Monroe KB Lee AY Remembering versus knowingissues in buyers processing of price
information J Acad Mark Sci 199927(2)207ndash25Moon S Voss G How do price range shoppers differ from reference price point
shoppers J Bus Res 200962(1)31ndash8Nunes J Boatwright P Incidental prices and their effect on willingness to pay J Mark
Res 200441(4)457ndash66Okada EM Trade-ins mental accounting and product replacement decisions J Consum
Res 200127(4)433ndash46Paden N Stell R Consumer product redistribution disposition decisions and channel
options J Mark Channels 200512(3)105ndash23Prelec D Loewenstein G The red and the black mental accounting of savings and debt
Mark Sci 199817(1)4-28Purohit D Exploring the relationship between the markets for new and used durable
goods the case of automobiles Mark Sci 199211(2)154ndash67Purohit D Playing theroleof buyerand seller the mental accounting oftrade-ins Mark
Lett 19956(2)101ndash10Rajendran KN Tellis GJ Contextual and temporal components of reference price J Mark
199458(1)22ndash34Sha1047297r E Simonson I Tversky A Reason-based choice Cognit 199349(12)11ndash36Sha1047297r E Thaler RH Invest now drink later spend never on the mental accounting of
delayed consumption J Econ Psychol 200627(5)694ndash712Sherry Jr JF A sociocultural analysis of a midwestern American 1047298ea market J Consum
Res 199017(1)13ndash30Strahilevitz MA Myers JG Donations to charity as purchase incentives how well they
work maydepend onwhatyou aretryingto sell J ConsumRes 199824(4)434ndash46Thaler RHTowardsa positivetheoryof consumerchoice J EconBehavOrgan19801(1)
39ndash60Thaler RH Mental accounting and consumer choice Mark Sci 19854(3)199ndash214Thaler RH Mental accounting matters J Behav Decis Making 199912(3)183ndash206Thaler RH Johnson EJ Gambling with the house money and trying to break even the
effects of prior outcomes on risky choice Manage Sci 199036(6)643ndash60Tversky A Kahneman D Judgment under uncertainty heuristics and biases Sci
1974185(4157)1124ndash31Tversky A Kahneman D The framing of decisions and the psychology of choice Sci
1981211(4481)453ndash8Tversky A Kahneman D Loss aversion in riskless choice a reference-dependent model
Quart J Econ 1991106(4)1039ndash61Urbany JE Bearden WO Weilbaker DC The effect of plausible and exaggerated refer-
ence prices on consumer perceptions and price search J Consum Res 198815(1)95-111
Winer RS A reference price model of brand choice for frequently purchased products J Consum Res 198613(2)250ndash6
Winer RS A multi-stage model of choice incorporating reference prices Mark Lett19891(1)27ndash36
Yam Survey (2006) httptaiwanyamorgtwsurvey Zhao H Jagpal S The effect of secondhand markets on the 1047297rms dynamic pricing and
new product introduction Int J Res Mark 200623(3)295ndash307
1078 H Chu S Liao Journal of Business Research 63 (2010) 1073ndash1078
Top Related