Less pains and more gains: an experimental study of the impact of price transparency of vacation packages on purchase intention

Abstract

Price transparency as consumer’s perception of difficulty in seeking for prices, may be of heuristic feature to influence decision-making process. This paper examines the impact of price transparency of vacation packages on purchase intention through three experiments. Experiment 1 examined the main effect of price transparency on purchase intention and found that low price transparency would increase purchase intention with the exclusion of the alternative explanation of risk aversion. Experiment 2 investigated the mediating role of information diagnosticity and demonstrated that low price transparency activated higher information diagnosticity, which in turn increased consumers’ purchase intention. Experiment 3 aimed at the moderating effect of sense of power and found that for consumers with low sense of power the impact of price transparency on information diagnosticity and purchase intention was significant while for those with high sense of power, there was no significant difference. The findings of the three experiments have practical implications for designing and marketing vacation packages.