Effect of credit card on willingness to pay
Investigation of the credit card effect on willingness to pay
The investigations reveal that the willingness to pay is comparatively increased when the customers are asked for the use of credit cards as compared to the use of cash. Generally the change in the willingness to pay has affected about 100%. For getting the ultimate results of this effect, different methodologies have been used to detect it.
From the 1970 onwards it is widely noted and proved that the credit card encourages spending behaviors. For example, people who have more credit cards make larger amount of purchases as compared to those who have one or two credit cards. The studies also show that customers with variety of credit cards have also more restaurant tips than those with one or even no credit card. Moreover it is also revealed that the persons with variety of credit cards often underestimate the purchases made. Or it can be stated that they forget the purchases they have made soon after they made.
For checking and revealing the facts of this phenomena, a study consisting few tests have been conducted and the evidences found including the “experimental analysis made by Feinberg (1986)”, “Respondents and general procedure”, “the cash vs. credit card manipulation” and “prizes”.
A second study has also been conducted in which the “willingness to pay” has been measured for a gift certificate, for which the value was fixed. This allowed us to determine whether credit card premium arises, solely because the customers simply adjust valuations from the different anchoring points relating to credit card and cash transactions.
Finally, the both studies represented the willingness to pay is increased when the customers are asked to use the credit cards instead of cash. In summary, this is the first study that demonstrates that willingness-to-pay is increased when customers are instructed to use a credit card rather than cash. The results were surprising because of the size the premium and
The investigations reveal that the willingness to pay is comparatively increased when the customers are asked for the use of credit cards as compared to the use of cash. Generally the change in the willingness to pay has affected about 100%. For getting the ultimate results of this effect, different methodologies have been used to detect it.
From the 1970 onwards it is widely noted and proved that the credit card encourages spending behaviors. For example, people who have more credit cards make larger amount of purchases as compared to those who have one or two credit cards. The studies also show that customers with variety of credit cards have also more restaurant tips than those with one or even no credit card. Moreover it is also revealed that the persons with variety of credit cards often underestimate the purchases made. Or it can be stated that they forget the purchases they have made soon after they made.
For checking and revealing the facts of this phenomena, a study consisting few tests have been conducted and the evidences found including the “experimental analysis made by Feinberg (1986)”, “Respondents and general procedure”, “the cash vs. credit card manipulation” and “prizes”.
A second study has also been conducted in which the “willingness to pay” has been measured for a gift certificate, for which the value was fixed. This allowed us to determine whether credit card premium arises, solely because the customers simply adjust valuations from the different anchoring points relating to credit card and cash transactions.
Finally, the both studies represented the willingness to pay is increased when the customers are asked to use the credit cards instead of cash. In summary, this is the first study that demonstrates that willingness-to-pay is increased when customers are instructed to use a credit card rather than cash. The results were surprising because of the size the premium and