Are consumers fooled by discounts? An experimental test in a consumer search environment

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dc.contributor.authorBayer, R.
dc.contributor.authorKe, C.
dc.date.issued2011
dc.description.abstractIn this article, we investigate experimentally whether people search optimally and how price promotions influence search behaviour. We implement a sequential search task with exogenous price dispersion in a baseline treatment and introduce discounts in two experimental treatments. We find that search behaviour is roughly consistent with optimal search but also observe some discount biases. If subjects do not know in advance where discounts are offered, the purchase probability is increased by 19 percentage points in shops with discounts, even after controlling for the benefit of the discount and for risk preferences. If consumers know in advance where discounts are given, then the bias is only weakly significant and much smaller (7 percentage points).
dc.description.statementofresponsibilityRalph-C. Bayer and Changzia Ke
dc.identifier.citationThe Economic Record, 2011; 87(279):575-586
dc.identifier.doi10.1111/j.1475-4932.2011.00724.x
dc.identifier.issn0013-0249
dc.identifier.issn1475-4932
dc.identifier.orcidBayer, R. [0000-0001-8066-2685]
dc.identifier.urihttp://hdl.handle.net/2440/69106
dc.language.isoen
dc.publisherBlackwell Publishing Asia
dc.rights© 2011 The Economic Society of Australia
dc.source.urihttps://doi.org/10.1111/j.1475-4932.2011.00724.x
dc.subjectC91
dc.subjectD82
dc.subjectD83
dc.titleAre consumers fooled by discounts? An experimental test in a consumer search environment
dc.typeJournal article
pubs.publication-statusPublished

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