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Rebates, Matches, and Consumer Behavior

  • Douglas D. Davis

    ()

    (Department of Economics, VCU School of Business)

  • Edward L. Millner

    ()

    (Department of Economics, VCU School of Business)

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 (a) “rebates” from the listed price, (b) “matching” quantities of chocolates for each bar purchased, and (c) simple price reductions. Contrary to standard theoretical predictions, and consistent 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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File URL: http://www.people.vcu.edu/~dddavis/working%20papers/DM2004.pdf
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Paper provided by VCU School of Business, Department of Economics in its series Working Papers with number 0401.

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Length: 21 pages
Date of creation: Sep 2004
Date of revision:
Handle: RePEc:vcu:wpaper:0401
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Web page: http://www.business.vcu.edu/economics

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  1. Philippe Février & Michael Visser, 2004. "A Study of Consumer Behavior Using Laboratory Data," Experimental Economics, Springer, vol. 7(1), pages 93-114, February.
  2. Glenn W. Harrison & Ronald M. Harstad & E. Elisabet Rutstr–m, 2004. "Experimental Methods and Elicitation of Values," Experimental Economics, Springer, vol. 7(2), pages 123-140, 06.
  3. 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, vol. 12(3), pages 318-338.
  4. Douglas Davis & Edward Millner & Robert Reilly, 2005. "Subsidy Schemes and Charitable Contributions: A Closer Look," Experimental Economics, Springer, vol. 8(2), pages 85-106, June.
  5. John Kagel & Leonard Green & Raymond Battalio, 1995. "Economic choice theory. an experimental analysis of animal behavior," Framed Field Experiments 00166, The Field Experiments Website.
  6. Eckel, Catherine C. & Grossman, Philip J., 2003. "Rebate versus matching: does how we subsidize charitable contributions matter?," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 681-701, March.
  7. James Andreoni & Lise Vesterlund, 2001. "Which Is The Fair Sex? Gender Differences In Altruism," The Quarterly Journal of Economics, MIT Press, vol. 116(1), pages 293-312, February.
  8. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, vol. 70(2), pages 737-753, March.
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