Probabilistic free price promotion vs. sure price promotion: Comparison between Japan and the U.S.
Mazer, Shampanier, and Ariely (2017) called a probabilistic free price promotion a promotion in which the purchase amount is free through a lottery. On the other hand, a promotion that ensures a lower purchase price was called a sure price promotion. Probabilistic free price promotions are known to have higher selection rates and sales than sure price promotions with equal expected values (Mazer et al., 2017; Lee, Morewedge, Hochman, and Ariely, 2019). In Experiment 4 of Mazer et al. (2017), they investigated whether participants would choose a probabilistic or sure price promotion when the amount was controlled and the probability was varied. The study also examined how the selection rate differed among the four other conditions of the promotion: pen, Amazon gift certificate, monetary gain, and monetary loss. The results showed that the promotion condition tended to pursue more risk than the monetary gain condition, even though the expected values were equal. This suggests that people have different risk tolerance depending on what they are willing to pay for. However, we conducted a similar survey in Japan and found a different trend from the previous studies, which we report here.