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A Consideration of the Pricing Structure of Aesthetic Services: An Example of Consumer Decision Making with Ambiguous Information

  • Ryoko WadaEmail author
Conference paper
  • 572 Downloads

Abstract

This study discusses the microstructure of the prices of aesthetic services using the model developed by Epstein and Schneider [1]. Because ambiguity regarding the quality of novel aesthetic technology prompts consumers to behave based on the assumption of the worst possible outcome, the demand for aesthetic services is low before the consumer experiences a novel aesthetic service. In addition, even though visitors see signals of the good quality of future services through their first experience, they remain pessimistic regarding the quality of the future services because of the variance in outcomes. For consumers, purchasing multiple tickets in one specific salon increases idiosyncratic risk. Thus, transparent information is crucial to increasing demand.

Keywords

Decision making Ambiguity Uncertainty Bayesian update Price structure Aesthetic services 

Notes

Acknowledgment

This research was supported by Service Science, Solutions and Foundation Integrated Research Program (S3FIRE), Research Institute of Science and Technology for Society (RISTEX), and Japan Science and Technology Agency (JST).

References

  1. 1.
    Epstein, Larry G. and Martin Schneider, 2008, Ambiguity, Information Quality, and Asset Pricing, The Journal of Finance,Volume 63, Issue 1, Feb 197–228.Google Scholar
  2. 2.
    Gilbor, Issak and David Schmeidler, 1989, Maxmin expected utility of nonunique prior, Journal of Mathemtatic Economics, No. 18, 141–153Google Scholar
  3. 3.
    Recruit, The beauty census 2014, Aesthetic Salons, (http://r-bmr.net/wp-content/uploads/2014/12/B_esthetic_sensus_20141204.pdf)
  4. 4.
    Wada, Ryoko 2007, An Analysis of Mechanism of Dynamic Decision Making under Ambiguity; Choice over Time and Attitude toward Ambiguity, the 4th chapter. Hakuto Shobo, 55–84Google Scholar

Copyright information

© Springer Japan 2017

Authors and Affiliations

  1. 1.Faculty of EconomicsKeiai UniversityChibaJapan

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