Testing the Effect of Price Framing on Nonresidents’ Perceptions of Dual Pricing in State Parks: An Application of Prospect Theory

Abstract

Dual pricing is a differential pricing technique that has been frequently practiced in public-funded parks and recreation services. Unfortunately, this practice can arouse resentment among nonresidents, especially those who know little about the financial aspects of public-funded parks and recreation services. Hence, the current study, informed by prospect theory used a 2 × 2×2 factorial design in the context of state parks to investigate the effectiveness of valence framing on nonresidents’ price-related perceptions. Results revealed that valence framing was an effective tactic to manage nonresidents’ perceived fairness. Moreover, the effects of valence framing on perceived price and perceived value were found to be dependent on the levels of price magnitude. Findings can be used to assist public-funded parks and recreation services who mainly target nonresidents with their price manipulations. Results led to a discussion of the theoretical and practical implications of the study.

Keywords:

• composite price
• dual pricing
• prospect theory
• price framing
• price magnitude
• public-funded parks

Disclosure statement

No potential conflict of interest was reported by the authors.