CPM CPM Price Psychology & Behavioral Economics 2

Question 1

Scarcity messaging ('Only 3 left in stock!') increases purchase intent by activating:

Accepted Answer

Loss aversion and fear of missing out (FOMO)

Answer

Scarcity signals trigger fear of loss and urgency, which behavioral research shows increases willingness to pay and purchase intent.

Question 2

In subscription pricing, which behavioral principle explains why annual plans have lower churn than monthly plans?

Accepted Answer

Sunk cost effect — customers feel committed after a large upfront payment

Answer

Having paid a lump sum upfront, customers feel psychologically invested and are less likely to cancel during the subscription period.

Question 3

The 'compromise effect' in pricing predicts that consumers tend to choose:

Accepted Answer

The middle option when three price tiers are presented

Answer

When three options are available, buyers tend to select the middle tier, making it a strategically important price point.

Question 4

Reference price theory holds that consumers evaluate a price by comparing it to:

Accepted Answer

An internal or external standard price stored in memory or visible in context

Answer

Reference prices can be internal (past purchase memory) or external (displayed original price), and deviations from them drive perceived value.

Question 5

Price-quality inference refers to the tendency of buyers to:

Accepted Answer

Use price as a signal of quality when product information is limited

Answer

In low-information purchase environments, a higher price signals higher quality, leading some segments to prefer pricier options.

CPM - Certified Pricing Manager Practice Test