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Pricing scheme choice: how process affects outcome

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    SYSNO ASEP0342784
    Document TypeJ - Journal Article
    R&D Document TypeJournal Article
    Subsidiary JOstatní články
    TitlePricing scheme choice: how process affects outcome
    Author(s) Shestakova, Natalia (NHU-C)
    Source TitleCERGE-EI Working Paper Series - ISSN 1211-3298
    Roč. 20, č. 2 (2010), s. 99-129
    Number of pages31 s.
    Publication formwww - www
    Languageeng - English
    CountryCZ - Czech Republic
    Keywordschoice process ; heuristics ; price discrimination
    Subject RIVAH - Economics
    R&D ProjectsLC542 GA MŠk - Ministry of Education, Youth and Sports (MEYS)
    CEZMSM0021620846 - NHU-C
    AnnotationStandard price discrimination theories are based on the assumption that consumers use their future demand estimates to evaluate net utility of each pricing scheme and choose the scheme with the highest value. However, some evidence suggests that consumers might not always behave this way. The experiment presented in this paper shows that indeed a substantial proportion of subjects choose not to evaluate the net utility of the offered pricing schemes. Instead, they select from pricing schemes based on a comparison of the schemes' parameters. Interestingly, this selection approach leads to the correct pricing-scheme choice when subjects are not well aware of their demand, and to the incorrect choice when they are. The results call for alternative theories of price discrimination and corresponding policy implications.
    WorkplaceEconomics Institute - CERGE
    ContactTomáš Pavela, pavela@cerge-ei.cz, Tel.: 224 005 122
    Year of Publishing2011
Number of the records: 1