Price Discount and Gift Choice: The Interplay Between Economic and Social Value

Price discounts are a popular pricing strategy because discounts increase the perceived economic value of a purchase. Prices are used as referents to assess the economic value of a purchase (Blattberg and Neslin 1990; Grewal et al. 1998). Accordingly, price discounts are offered to increase consumers’ perceived economic product value and thus increase purchase intention (Dodds and Monroe 1985). However, social, rather than economic, value is the primary concern in gift choice. Accordingly, consumers are often willing to pay a premium for gifts with high social value. This social value of gifts is important because it helps societies maintain social norms (i.e., reciprocity) and reaffirm social values through symbolic social conventions (i.e., achievement) (Camerer 1988; Belk and Coon 1993). Interestingly, price discounts remain ubiquitous during gift-giving holidays.