Uninformed Choices in Perishables

Karsten Hansen (), Kanishka Misra () and Robert Evan Sanders ()
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Karsten Hansen: Rady School of Management, University of California, San Diego, La Jolla, California 92093
Kanishka Misra: Rady School of Management, University of California, San Diego, La Jolla, California 92093
Robert Evan Sanders: Rady School of Management, University of California, San Diego, La Jolla, California 92093

Marketing Science, 2024, vol. 43, issue 4, 751-777

Abstract: We study how consumers choose among perishable items with different expiration dates and the effects of these choices on retail food waste. We use a novel data set that tracks choices at the expiration-date level. Our data include a field experiment with dynamic discounts for oldest-vintage items and retailer-driven shelf rotations. We develop a theoretical framework with consumers who may be uninformed due to choice frictions (costly search) or mental gaps (ignoring expiration dates), and we derive testable predictions related to consumer information, dynamic pricing, and shelf organization. Our empirical analyses lead to four main findings. First, consumers make uninformed choices: In almost half of purchases, consumers choose an older item when an equally priced, fresher one is available, and simply rotating the oldest vintage forward increases its choice share by 24 percentage points. Second, both mental gaps and choice frictions cause consumers to make uninformed choices. Third, dynamic discounts encourage consumers to purchase the oldest vintage by discouraging search for fresher items. By discouraging search, discounts have an unexpected spillover effect of keeping the shelf organized after shelf rotations, which affects future consumers’ choices. Fourth, we quantify the waste implications of this spillover using counterfactual simulations. Dynamic pricing and shelf rotation alone reduce waste by 6% and 15%, respectively, but combined, these policies reduce waste 30%—much more than the sum of their individual effects. Our findings suggest that relatively simple changes in pricing and display strategies can substantially reduce waste in perishables.

Keywords: consumer information; search; dynamic pricing; nudges; perishable inventory; expiration dates; sustainability (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:43:y:2024:i:4:p:751-777

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