 Pricing Psychology: Evidence from a Randomized Field Experiment in a Consumer Credit MarketMarianne Bertrand and Dean Karlan No 619, Econometric Society 2004 North American Summer Meetings from Econometric Society Abstract: This paper tests stylized facts and theories from behavioral economics and laboratory experiments using a randomized field experiment of our design. A major South African consumer credit lender issued 60,000 scripted direct mail solicitations where several marketing “treatments†were randomly assigned. These treatments were designed to test the empirical sensitivity of decision frames that have proven powerful in the lab but remain largely untested in the market. Examples include loss v. gain, level v. difference, and more v. less information. The Lender also randomly assigned interest rate offers, enabling us to scale “behavioral†responses to marketing treatments by canonical price elasticities and thereby to “price psychology†. We will also test the extent to which our behavioral marketing exacerbated or ameliorated private information problems (if any) in this market. The mailing yielded over 6,000 new loans and preliminary evidence suggests that consumers responded strongly to both prices and frames. Keywords: prices; frames; psychology and economics; field experiment (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ecm:nasm04:619 Access Statistics for this paper More papers in Econometric Society 2004 North American Summer Meetings from Econometric Society Contact information at EDIRC. |
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