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Discounts and Consumer Search Behavior: The Role of Framing

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  • Ralph-C Bayer

    (School of Economics, University of Adelaide)

  • Changxia Ke

    (Max Planck Institute)

Abstract

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 dehttps://media.adelaide.edu.au/economics/pressure.

Suggested Citation

  • Ralph-C Bayer & Changxia Ke, 2010. "Discounts and Consumer Search Behavior: The Role of Framing," School of Economics and Public Policy Working Papers 2010-21, University of Adelaide, School of Economics and Public Policy.
  • Handle: RePEc:adl:wpaper:2010-21
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    Cited by:

    1. Yi-Fen Chen & Shi-Han Chang, 2016. "The online framing effect: the moderating role of warning, brand familiarity, and product type," Electronic Commerce Research, Springer, vol. 16(3), pages 355-374, September.
    2. Jean-Pierre I. Rest & Alan M. Sears & Li Miao & Lorna Wang, 2020. "A note on the future of personalized pricing: cause for concern," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(2), pages 113-118, April.
    3. Fochmann, Martin & Hemmerich, Kristina & Kiesewetter, Dirk, 2016. "Intrinsic and extrinsic effects on behavioral tax biases in risky investment decisions," Journal of Economic Psychology, Elsevier, vol. 56(C), pages 218-231.
    4. Fabrizi, Simona & Lippert, Steffen & Puppe, Clemens & Rosenkranz, Stephanie, 2016. "Manufacturer suggested retail prices, loss aversion and competition," Journal of Economic Psychology, Elsevier, vol. 53(C), pages 141-153.
    5. Weiqing Li & Qianyi Dan & Maomao Chi & Weijun Wang, 2021. "Influence of Price Level and Perceived Price Dispersion on Consumer Information Search Behaviour: Moderating Effect of Durables and Consumables," Sustainability, MDPI, vol. 13(4), pages 1-13, February.
    6. Kops, Christopher & Pasichnichenko, Illia, 2023. "Testing negative value of information and ambiguity aversion," Journal of Economic Theory, Elsevier, vol. 213(C).

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    More about this item

    Keywords

    Consumer Search; Price Framing; Price discounts; Competition;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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