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To Buy or not to Buy? Shrouding and Partitioning of Prices in an Online Shopping Field Experiment

Author

Listed:
  • Markus Dertwinkel-Kalt
  • Mats Köster
  • Matthias Sutter

Abstract

We examine whether shrouding surcharges or partitioning prices raises demand in online shopping where consumers have very low costs of cancelling an initiated purchase process. In a field experiment with more than 34,000 consumers, we find that consumers in the online shop of a large German cinema initiate a purchase process more often when surcharges are shrouded or indicated separately, but they also drop out more often when the overall price becomes known at the check-out. In sum, the demand distribution is independent of the price presentation. This result qualifies previous findings on the effectiveness of such pricing practices and can be rationalized through low cancellation costs.

Suggested Citation

  • Markus Dertwinkel-Kalt & Mats Köster & Matthias Sutter, 2019. "To Buy or not to Buy? Shrouding and Partitioning of Prices in an Online Shopping Field Experiment," CESifo Working Paper Series 7475, CESifo.
    • Handle: RePEc:ces:ceswps:_7475
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    References listed on IDEAS

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    Cited by:

    1. Tom Blake & Sarah Moshary & Kane Sweeney & Steve Tadelis, 2021. "Price Salience and Product Choice," Marketing Science, INFORMS, vol. 40(4), pages 619-636, July.

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    More about this item

    Keywords

    salience; inattention; shrouding; price partitioning; field experiment;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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