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Discounts and Consumer Search Behavior: The Role of Framing

  • Ralph-C Bayer

    ()

    (School of Economics, University of Adelaide)

  • Changxia Ke

    (Max Planck Institute)

We implement a simple two-shop search model in the laboratory with the aim to investigate if consumers behave differently in equivalent situations, where prices are displayed either as net prices or as gross prices with discounts. We compare treatments, where we either depict the known price of the first shop or the initially uncertain price of the second shop as a gross price with a discount, with treatments without discounts. We ind that subjects search less in both treatments with discounts. Hence, we conclude that retailers can use this framing effect in order to reduce the competitiveness in their market, since decreased search intensities dampen competitive pressure.

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File URL: http://www.economics.adelaide.edu.au/research/papers/doc/wp2010-21.pdf
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Paper provided by University of Adelaide, School of Economics in its series School of Economics Working Papers with number 2010-21.

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Length: 31 pages
Date of creation: Oct 2010
Date of revision:
Handle: RePEc:adl:wpaper:2010-21
Contact details of provider: Postal: Adelaide SA 5005
Phone: (618) 8303 5540
Web page: http://www.economics.adelaide.edu.au/

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