in this paper, we study the role of consumer price expectations in influencing consumer purchase decisions. specifically, we examine the drivers of relative dominance of two price expectations
one formed prior to store visit (PRIOR) and the other about price in other stores (POST) formed after being exposed to local store price. we collect the data from and online store shopping environment, allowing participants to make real purchase decisions. we have identified two distinct classes of shopping behaviors in our data inside-focused (IF) and outside-looking (OL). purchase decisions of the former are mainly driven by PRIOR while that of the latter by POST. at constant cost, we show that a promotion scheme with deep discounts (e.g., 5% for 3 weeks or 15% price cut in the first week) boosts sales more tham the one with shallow discount (e.g., 3% for 5 weeks). this increase comes mainly form the OL class, which is more sensitive to price changes. we further demonstrate how stores should manage consumer price expectations to maximize the sales lift during price promotions.