Price Salience and Product Choice

Thomas Blake, Sarah Moshary, Kane Sweeney and Steven Tadelis

No 25186, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the effect of price salience on whether a product is purchased and, conditional on purchase, the quality purchased. Consistent with our theoretical predictions, we find that making the full purchase price salient to consumers reduces both the quality and quantity of goods purchased. The effect of salience on quality accounts for at least 28% of the overall revenue decline. Evidence shows that the effects persist beyond the first purchase and impact even experienced users. Detailed click-stream data shows that price-obfuscation makes price comparisons difficult and results in consumers spending more than they otherwise would. We also find that sellers respond to the increased price obfuscation by listing higher quality tickets.

JEL-codes: C93 D12 D83 L11 (search for similar items in EconPapers)
Date: 2018-10
New Economics Papers: this item is included in nep-com and nep-ind
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Citations: View citations in EconPapers (15)

Published as Tom Blake & Sarah Moshary & Kane Sweeney & Steve Tadelis, 2021. "Price Salience and Product Choice," Marketing Science, vol 40(4), pages 619-636.

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