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Experience Premium in Consumer Search: Evidence from Drivers’ Refueling Behavior

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  • Imahie, Satoshi

Abstract

Why do uninformed consumers pay more? A long-standing answer is market unfamiliarity. Yet how much it contributes to information frictions, and whether it fades with experience, have not been directly measured. I answer these questions using millions of fuel purchases by Japanese drivers. Identification exploits two kinds of variation in familiarity, from travel and relocation. Comparing the same driver across markets, I find that unfamiliarity accounts for 62% of the price gap between informed and uninformed consumers, while persistent individual differences explain the rest. This unfamiliarity-driven gap (the experience premium) declines with repeated purchases, consistent with learning in consumer search.

Suggested Citation

  • Imahie, Satoshi, 2026. "Experience Premium in Consumer Search: Evidence from Drivers’ Refueling Behavior," TSE Working Papers 26-1757, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:131884
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    References listed on IDEAS

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