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Good-Looking Prices

Bradley Ruffle (), Arie Sherman and Zeev Shtudiner ()

Department of Economics Working Papers from McMaster University

Abstract: We design a field experiment to test for price discrimination at seemingly highly competitive Israeli produce markets. We trained 90 buyers and sent them to produce markets across Israel. After verifying a product’s posted price, they asked for a discount on a one-kilogram or one-unit purchase. Vendors employ third-degree price discrimination: women are offered larger and more frequent discounts than men, and the more attractive the female buyer, the larger and more frequent the discount offered. Male buyers do not benefit from this beauty discount. No other buyer characteristic is a significant predictor of the likelihood or size of a discount. To understand our findings, we provide a more nuanced view of these markets that includes search costs and considerable vendor price-setting discretion.

Keywords: experimental economics; beauty; price discrimination; negotiation; price discounts; search costs (search for similar items in EconPapers)
JEL-codes: C91 D01 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2020-02
New Economics Papers: this item is included in nep-com and nep-exp
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Persistent link: https://EconPapers.repec.org/RePEc:mcm:deptwp:2020-02

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