Do consumers take advantage of common pricing standards? An experimental investigation

Robert Sugden, Jiwei Zheng

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)
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Abstract

Gaudeul and Sugden have hypothesized that, when some but not all competing products are priced in a common standard, consumers who are liable to make errors in cross-standard price comparisons use decision rules that discriminate in favour of common-standard offers. Such behavior incentivizes sellers to use common standards. We report an experimental test of this hypothesis, using choice tasks similar to those represented in the Gaudeul–Sugden model. We found that offers priced in common standards were more likely to inspected but less likely to be chosen, and that subjects gained little benefit from common pricing standards that applied to some but not all offers. Most subjects used ‘dominance editing’ operations which eliminated transparently dominated offers, either as an initial shortlisting device or while offers were being sorted. Because these operations discriminate against common-standard offers, their use incentivizes sellers not to use common standards.
Original languageEnglish
Pages (from-to)2126-2143
JournalManagement Science
Volume64
Issue number5
Early online date24 Mar 2017
DOIs
Publication statusPublished - May 2018

Keywords

  • shortlisting
  • common standard
  • dominance editing
  • consideration set

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