When the Price You See Is Not the Price You Get: A Bargaining Study

Sandro Shelegia and Joshua Sherman ()
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Joshua Sherman: https://econ.univie.ac.at

Vienna Economics Papers from University of Vienna, Department of Economics

Abstract: Although (or because) it is uncommon to observe consumers bargaining at retail stores in the Western world, the circumstances under which retail firms are actually willing to bargain is largely unknown. We construct a theoretical model in order to better understand how price and firm characteristics influence a firm's incentives to bargain and test the model's predictions by conducting a field experiment at nearly 300 stores throughout Vienna, Austria. In particular, we analyze the extent to which retail firms throughout Vienna consent to granting a discount when asked. A discount was granted approximately 40% of the time, and the average positive discount was approximately 10% off of a product's posted price. We relate firms' willingness to bargain to price and firm characteristics, in line with our theory.

JEL-codes: C78 C93 D12 L81 (search for similar items in EconPapers)
Date: 2014-11
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Citations: View citations in EconPapers (5)

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