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

Robert Sugden and Jiwei Zheng
Additional contact information
Jiwei Zheng: University of Warwick

No 15-12, Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) from School of Economics, University of East Anglia, Norwich, UK.

Abstract: Gaudeul and Sugden have hypothesized that, when some but not all competing products are priced in a common standard and when consumers are liable to make errors in cross-standard price comparisons, consumers confine their attention to common-standard offers. This ‘largest common standard’ (LCS) heuristic provides incentives for sellers to use common standards, and so differs from most ‘consider-then-choose’ decision processes by not exposing consumers to exploitation by sellers. We report an experimental test of this hypothesis, using choice tasks similar to those represented in the Gaudeul–Sugden model. These tasks are parameterized such that participants, given their actual cognitive abilities, would benefit by using the LCS heuristic. However, we find little evidence that this heuristic is used. Most participants use a ‘dominance editing’ (DE) rule which begins by eliminating transparently dominated offers. This rule incentivises sellers not to use common standards. Since DE is less efficient than LCS, given participants’ cognitive abilities, the use of DE is evidence of overconfidence.

Keywords: shortlisting; common standard; largest common standard heuristic; dominance editing; consideration set (search for similar items in EconPapers)
Date: 2015-07
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.uea.ac.uk/documents/166500/0/CBESS+15- ... 36-9a28-9eeef9bd83c0 main text (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
Journal Article: Do Consumers Take Advantage of Common Pricing Standards? An Experimental Investigation (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:uea:wcbess:15-12

Ordering information: This working paper can be ordered from
Reception, School of Economics, University of East Anglia, Norwich Research Park, Norwich, NR4 7TJ, UK

Access Statistics for this paper

More papers in Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) from School of Economics, University of East Anglia, Norwich, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Cara Liggins ().