Do Consumers Take Advantage of Common Pricing Standards? An Experimental Investigation

Robert Sugden and Jiwei Zheng ()
Additional contact information
Jiwei Zheng: School of Economics, Centre for Behavioural and Experimental Social Science and Centre for Competition Policy, University of East Anglia, Norwich NR4 7TJ, United Kingdom

Management Science, 2018, vol. 64, issue 5, 2126-2143

Abstract: Gaudeul and Sugden [Gaudeul A, Sugden R (2012) Spurious complexity and common standards in markets for consumer goods. Economica 79(314):209–225] have hypothesized that when some but not all competing products are priced in a common standard, consumers who are liable to make errors in cross-standard price comparisons use decision rules that discriminate in favor of common-standard offers. Such behavior incentivizes sellers to use common standards. We report an experimental test of this hypothesis, using choice tasks similar to those represented in the Gaudeul–Sugden model. We find that offers priced in common standards were more likely to be inspected but less likely to be chosen, and that subjects gained little benefit from common pricing standards that applied to some but not all offers. Most subjects used “dominance editing” operations that eliminated transparently dominated offers, either as an initial shortlisting device or while offers were being sorted. Because these operations discriminate against common-standard offers, their use incentivizes sellers not to use common standards.

Keywords: shortlisting; common standard; dominance editing; consideration set (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/mnsc.2016.2676 (application/pdf)

Related works:
Working Paper: Do consumers take advantage of common pricing standards? An experimental investigation (2015)
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:inm:ormnsc:v:64:y:2018:i:5:p:2126-2143

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().