Exploring the Limits of Arbitrary Coherence

Abstract

In Behavioral Economics, “arbitrary coherence” is caused when an arbitrarily chosen number, known to be random, influences the amount potential purchasers are willing to pay for a product. From that initial arbitrary point, all evaluations of prices are coherent with the randomly chosen starting point. Marketers can use the anchor point to help set optimal prices and determine optimal price changes. An initial study was conducted to replicate research found in the literature and assess the arbitrary coherence effect on consumer pricing perceptions. The first study confirmed the effect, but led to a concern about the survey questions. A second study attempted to resolve the concern, but indicated a lack of arbitrary coherence. A third study was conducted to further investigate the issues arising from the first two studies. This paper presents the issues identified in the first two studies and reports on the results of a third study designed to resolve the questions that arose in the earlier research.