Sticky information and price controls: Evidence from a natural experiment

Doron Sayag, Avichai Snir and Daniel Levy ()

Economics Letters, 2025, vol. 248, issue C

Abstract: We test the predictions of the sticky information model using a survey dataset by comparing shoppers’ accuracy in recalling the prices of regulated and comparable unregulated products. Because regulated product prices are capped, they are sold more than comparable unregulated products, while their prices change less frequently and vary less across stores and between brands, than the prices of comparable unregulated products. Therefore, shoppers would be expected to recall the regulated product prices more accurately. However, we find that shoppers are better at recalling the prices of unregulated products, in line with the sticky information model which predicts that shoppers will be more attentive to prices that change more frequently.

Keywords: Sticky information; Price cap; Price regulation; Price control; Price adjustment; Sticky prices; Rigid prices (search for similar items in EconPapers)
JEL-codes: D12 D83 D91 E31 K20 L11 L16 L50 (search for similar items in EconPapers)
Date: 2025
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Related works:
Journal Article: Sticky information and price controls: Evidence from a natural experiment (2025)
Working Paper: Sticky information and price controls: Evidence from a natural experiment (2025)
Working Paper: Sticky information and price controls: Evidence from a natural experiment (2025)
Working Paper: Sticky Information and Price Controls: Evidence from a Natural Experiment (2025)
Working Paper: Sticky information and price controls: Evidence from a natural experiment (2025)
Working Paper: Sticky Information and Price Controls: Evidence from a Natural Experiment (2025)
Working Paper: Sticky Information and Price Controls: Evidence from a Natural Experiment (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:248:y:2025:i:c:s0165176525000825

DOI: 10.1016/j.econlet.2025.112245

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