The Veblen effect revisited: literature and empirical analyses

This dissertation revisits the Veblen Effect, a phenomenon in which higher prices increase consumer demand due to perceived prestige, particularly in the context of luxury goods and experiences. Combining qualitative insights, a comprehensive literature review, experimental methods, and real-world data analysis, the dissertation aims to deepen the theoretical and empirical understanding of this counterintuitive consumption behavior. The work contributes to the growing body of research on conspicuous and status-driven consumption, with direct implications for marketing, pricing strategies, and luxury brand management. The study begins with a qualitative pre-study that explores consumer perceptions and motivations related to luxury purchases. Interviews and open-ended surveys confirm the relevance of the Veblen Effect in real-world settings and identify status signaling and social comparison as core drivers. This exploratory phase provides foundational insights for the design of subsequent empirical work. The second part presents a literature review that maps the evolution of research on the Veblen Effect and related constructs such as (in)conspicuous consumption. The review categorizes and critiques both empirical and conceptual contributions, highlighting a gap in empirical studies that consider the interaction of intrinsic and extrinsic motivations in luxury consumption. To address this gap, a quantitative pre-study follows, identifying appropriate product categories and brands for empirical testing. This informs the main experimental study, which investigates how intrinsic motivations (perfectionism, hedonism) and extrinsic motivations (Veblenian status signaling, snob appeal, bandwagon effects) interact with price perception. Results show that price increases can enhance desirability, especially among consumers driven by extrinsic motives, validating the Veblen hypothesis in controlled settings. The final empirical chapter analyzes transactional data from the luxury hotel industry, providing evidence of the Veblen Effect in real purchase contexts. By segmenting consumer behavior into motivational clusters (e.g., Veblenian, snob, hedonist), the study reveals that higher room prices are associated with increased demand in status-driven contexts, while intrinsic motivations (e.g., quality seeking) moderate this effect. This chapter demonstrates the practical relevance of Veblenian consumption in real markets and provides actionable insights for revenue management and pricing strategies. In sum, this dissertation offers a multi-method investigation into how and why the Veblen Effect persists in modern consumer behavior. It shows that while luxury consumption is often driven by social signaling, the interplay of psychological motivations determines the strength and presence of price-driven desirability. The findings advance theoretical models of luxury demand and offer strategic recommendations for luxury brand positioning, pricing, and segmentation.