BUY NOW OR BUY LATER: THE EFFECTS OF SCARCITY AND DISCOUNTS ON PURCHASE DECISIONS

This research investigates a burgeoning pricing strategy and its effects on purchase behavior. Drawing from the expected-utility and prospect theories, we test the counteracting variables of scarcity and future discount across two studies. We first implement a flea market scenario to demonstrate that scarcity creates emotional value that increases purchase likelihood. Next, we determine the levels of scarcity and discount that maximize purchase in a department store context. The findings suggest that the level of discount predicts the purchase of highly visible products; for less visible products, scarcity drives the decision. These relationships are moderated by involvement with the product class.