Willingness to pay and nuanced cultural cues: Evidence from Hong Kong's license-plate auction market

Chi Keung WOO, Ira HOROWITZ, Stephen LUK, Aaron LAI

Research output: Contribution to journalArticles

18 Citations (Scopus)

Abstract

We estimate a hedonic price model of willingness to pay (WTP) for superstition. The model explains WTP measured by winning bids in Hong Kong license-plate auctions through numeric and alpha-numeric sequences catering to culturally-sensitive superstitions, tempered by self-expression, economic and auction-specific considerations. The paper adds to the extant literature on three dimensions. First, we focus on a commodity that is a necessary accessory with no intrinsic value, known to be available in unlimited supply at a production cost substantially less than the buyer's WTP. Second, we show differentiated responses by consumers to nuanced cues that exploit well-known local cultural sensitivities. Finally, we incorporate macroeconomic and auction-specific variables to elicit their impact on consumer preferences and behavior within our culturally-sensitive context. Our results suggest quantifiable differences in consumer responses to psychologically-nuanced cultural cues, which management can exploit to its competitive advantage. This evidence is relevant and timely, given the rising corporate interest in serving the vast and growing consumer market in China. Copyright © 2007 Elsevier B.V. All rights reserved.
Original languageEnglish
Pages (from-to)35-53
JournalJournal of Economic Psychology
Volume29
Issue number1
DOIs
Publication statusPublished - Feb 2008

Citation

Woo, C.-K., Horowitz, I., Luk, S., & Lai, A. (2008). Willingness to pay and nuanced cultural cues: Evidence from Hong Kong's license-plate auction market. Journal of Economic Psychology, 29(1), 35-53. doi: 10.1016/j.joep.2007.03.002

Keywords

  • Superstition
  • Consumer psychology
  • Behavioral economics
  • Globalization
  • Quantitative methods

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