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Rebates, Matches, and Consumer Behavior

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  • Douglas D. Davis

    (Department of Economics, Virginia Commonwealth University)

  • Edward L. Millner

    (Department of Economics, Virginia Commonwealth University)

Abstract

An experiment conducted to examine the effects of different discount formats on consumer purchases is reported. Participants made a series of purchase decisions for chocolate bars given (1) “rebates” from the listed price, (2) “matching” quantities of chocolates for each bar purchased, and (3) simple price reductions. Contrary to standard theoretical predictions, and consistent with results in the context of charitable contributions by Eckel and Grossman (2003), we find that participants purchase significantly more chocolate bars under a “matching” sales format than under a comparable “rebate” format. Inattention to the net consequences of decisions, as well as some “rebate aversion,” explain the preference for matching discounts.

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Bibliographic Info

Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 72 (2005)
Issue (Month): 2 (October)
Pages: 410–421

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Handle: RePEc:sej:ancoec:v:72:2:y:2005:p:410-421

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  1. John Kagel & Raymond Battalio & Leonard Green, 1995. "Economic choice theory. an experimental analysis of animal behavior," Framed Field Experiments, The Field Experiments Website 00166, The Field Experiments Website.
  2. Philippe Février & Michael Visser, 2000. "AStudyof Consumer Behavior Using Laboratory Data," Working Papers, Centre de Recherche en Economie et Statistique 2000-12, Centre de Recherche en Economie et Statistique.
  3. Andreoni, James & Vesterlund, Lise, 2001. "Which is the Fair Sex? Gender Differences in Altruism," Staff General Research Papers, Iowa State University, Department of Economics 1951, Iowa State University, Department of Economics.
  4. Eckel, Catherine C. & Grossman, Philip J., 2003. "Rebate versus matching: does how we subsidize charitable contributions matter?," Journal of Public Economics, Elsevier, Elsevier, vol. 87(3-4), pages 681-701, March.
  5. Glenn W. Harrison & Ronald M. Harstad & E. Elisabet Rutstr–m, 2004. "Experimental Methods and Elicitation of Values," Experimental Economics, Springer, Springer, vol. 7(2), pages 123-140, 06.
  6. Douglas Davis & Edward Millner & Robert Reilly, 2005. "Subsidy Schemes and Charitable Contributions: A Closer Look," Experimental Economics, Springer, Springer, vol. 8(2), pages 85-106, June.
  7. Elizabeth Hoffman & Dale J. Menkhaus & Dipankar Chakravarti & Ray A. Field & Glen D. Whipple, 1993. "Using Laboratory Experimental Auctions in Marketing Research: A Case Study of New Packaging for Fresh Beef," Marketing Science, INFORMS, INFORMS, vol. 12(3), pages 318-338.
  8. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, Econometric Society, vol. 70(2), pages 737-753, March.
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Cited by:
  1. Saez, Emmanuel, 2007. "Details Matter: The Impact of Presentation and Information on the Take-up of Financial Incentives for Retirement Saving," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6386, C.E.P.R. Discussion Papers.
  2. Axsen, Jonn & Mountain, Dean C. & Jaccard, Mark, 2009. "Combining stated and revealed choice research to simulate the neighbor effect: The case of hybrid-electric vehicles," Resource and Energy Economics, Elsevier, Elsevier, vol. 31(3), pages 221-238, August.
  3. Neslihan Uler, 2011. "Public goods provision, inequality and taxes," Experimental Economics, Springer, Springer, vol. 14(3), pages 287-306, September.
  4. Scharf, Kim; Smith, Sarah, 2010. "Rational Inattention to Subsidies for Charitable Contributions," CAGE Online Working Paper Series, Competitive Advantage in the Global Economy (CAGE) 02, Competitive Advantage in the Global Economy (CAGE).
  5. Catherine C. Eckel & Philip J. Grossman, 2006. "Subsidizing Charitable Contributions in the Field: Evidence from a Non-Secular Charity," Development Research Unit Working Paper Series, Monash University, Department of Economics archive-44, Monash University, Department of Economics.
  6. Johannes Diederich & Timo Goeschl, 2013. "To Give or Not to Give: The Price of Contributing and the Provision of Public Goods," NBER Working Papers 19332, National Bureau of Economic Research, Inc.
  7. Lisa Bruttel, 2013. "Is there an Exclusionary Effect of Retroactive Price Reduction Schemes?," Working Paper Series of the Department of Economics, University of Konstanz, Department of Economics, University of Konstanz 2013-21, Department of Economics, University of Konstanz.
  8. Catherine Eckel & Philip Grossman, 2005. "Subsidizing charitable contributions: A field test comparing matching and rebate subsidies," Framed Field Experiments, The Field Experiments Website 00145, The Field Experiments Website.

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