The Impact of Resource Scarcity on Price-Quality Judgments

Abstract

Consumers routinely encounter situations in which they perceive that resources are scarce. However, little is known about how this perception influences consumers’ use of price in their purchase decisions. The present research seeks to fill this gap by examining the link between scarcity and the tendency to use price to judge product quality, and the mechanisms underlying that link. Six studies (and five more reported in the web appendix) using multiple product categories and a variety of operationalizations of both scarcity and price-quality judgments show that scarcity decreases consumers’ tendency to use price to judge product quality. This occurs because scarcity induces a desire to compensate for the shortage and seek abundance, and thereby reduces an individual’s general categorization tendency (because categorizing brings about a feeling of reduction); this, in turn, hinders consumers from viewing products as belonging to different price-tier groups, and thus lowers their tendency to use price as a basis for judging product quality. Boundary conditions for the proposed effect are also identified. The current research makes fundamental contributions to the literatures on scarcity, price-quality judgments, and categorization.