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