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Details and Big Pictures: Consumer Use of Actual Prices and Price Images When Choosing a Store

Carlos Lourenco and Els Gijsbrechts

No 2022/02, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

Abstract: In this paper, we develop a model of consumer patronage decisions to evaluate the effect of store price images vis-a-vis that of objective basket prices. Within this dual retail price model, the two types of price information are linked through the dynamic formation of price images over time, itself based on actual prices. We show that not accounting for the effect of (dynamic) price perceptions may seriously bias store traffic estimation in response to price changes. Finally, we explore which demographic and shopping characteristics of consumers may explain or shed light on differences in sensitivity to different price information.

Date: 2022-02
New Economics Papers: this item is included in nep-ban, nep-com and nep-mon
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More papers in Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa Department of Economics, ISEG - Lisbon School of Economics and Management, Universidade de Lisboa, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL.
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