Price Salience and Product Choice

Tom Blake (), Sarah Moshary (), Kane Sweeney () and Steve Tadelis ()
Additional contact information
Tom Blake: eBay Research, San Jose, California 95125
Sarah Moshary: University of Chicago Booth School of Business, Chicago, Illinois 60637
Kane Sweeney: Instacart, San Francisco, California 94105
Steve Tadelis: University of California Berkeley, Berkeley, California 94720; National Bureau of Economic Research, Cambridge, Massachusetts 02138; Center for Economic and Policy Research, Washington, District of Columbia 20009

Marketing Science, 2021, vol. 40, issue 4, 619-636

Abstract: Online vendors often employ drip-pricing strategies, where mandatory fees are displayed at a later stage in the purchase process than base prices. We analyze a large-scale field experiment on StubHub.com and show that disclosing fees upfront reduces both the quantity and quality of purchases. The effect of salience on quality accounts for at least 28% of the overall revenue decline. Detailed click-stream data show that price shrouding makes price comparisons difficult and results in consumers spending more than they would otherwise. We also find that sellers respond to increased price obfuscation by listing higher-quality tickets.

Keywords: price salience; e-commerce; field experiment (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:40:y:2021:i:4:p:619-636

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