When it comes to pricing strategies, consumers are generally more sensitive to price increases than price decreases?

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Carey

Business

12 May, 08:55

When it comes to pricing strategies, consumers are generally more sensitive to price increases than price decreases?

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Ernesto · Answer 1

True.

Under behavioral finance, consumers are more sensitive to price increases, and sellers can lose more clients to an increased price than they would gain for a price decrease. This phenomenon related to our loss aversion and disincentive to pay for more than its worth. It also relates to the downward sloping demand that is not perfectly straight or inverse but slightly curved.