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The effect of olfactory sensory cues on willingness to pay and choice under risk

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  • Kechagia, Varvara
  • Drichoutis, Andreas C.

Abstract

Several studies show that sensory cues influence consumer decision making processes. While scent is a key component of a market’s physical environment, it has received far less attention in the academic literature as compared, for example, with visual cues. In addition, most of the studies that examine the effect of ambient scents fail on one or both of these criteria: to properly control the influence of nuisance factors and/or to elicit preferences under real monetary incentives. We collected data from a laboratory experiment where we varied on a between subjects design the dispersion of a citrus fragrance. We then elicited subjects’ willingness to pay for two unbranded products — a mug and a chocolate — by having subjects participate in a 2nd price Vickrey auction. We also elicited subjects’ risk preferences using lottery choice tasks. Our results show a statistically and economically significant effect on subjects’ willingness to pay: valuations increased up to 49% for subjects who were exposed to a citrus scent as compared to the control group. We do not find a statistically significant effect of the citrus scent on subjects’ risk aversion.

Suggested Citation

  • Kechagia, Varvara & Drichoutis, Andreas C., 2017. "The effect of olfactory sensory cues on willingness to pay and choice under risk," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 70(C), pages 33-46.
  • Handle: RePEc:eee:soceco:v:70:y:2017:i:c:p:33-46
    DOI: 10.1016/j.socec.2017.07.005
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    Cited by:

    1. Maurizio Canavari & Andreas C. Drichoutis & Jayson L. Lusk & Rodolfo M. Nayga, Jr., 2018. "How to run an experimental auction: A review of recent advances," Working Papers 2018-5, Agricultural University of Athens, Department Of Agricultural Economics.
    2. Andreas, Drichoutis & Rodolfo, Nayga, 2019. "Game form recognition in preference elicitation, cognitive abilities and cognitive load," MPRA Paper 97980, University Library of Munich, Germany, revised 06 Jan 2020.

    More about this item

    Keywords

    Scent cues; Fragrance; Olfactory; Willingness to pay; Risk preferences; Risk aversion; Laboratory experiment;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D87 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Neuroeconomics

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