Unveiling the Impact of Delaying Price Disclosure: Evidence from a Field Experiment on a Hotel Booking Platform

Abstract

Online intermediary platforms are the marketplaces where consumers come to search for and compare products from different sellers and make purchases. On the one hand, these platforms facilitate clear price comparisons by listing prices on the search result pages to attract consumers. On the other hand, they also have the incentive to obfuscate prices to induce product exploration and purchase. Given this trade-off, we conducted a large-scale field experiment on a leading hotel booking platform in China for eight months, examining the impact of delaying price disclosure, i.e., hiding price information on the search result pages and revealing the price after the user clicks into a hotel. We find that delaying price disclosure has different effects on the likelihood of hotel bookings for different types of users: on the day of treatment, it doesn’t affect booking likelihood for registered users but significantly increases booking likelihood for unregistered users. We further find that delaying price disclosure expands the breadth of the consideration set (i.e., the number of hotels viewed) for both groups, but influences the depth of the consideration set (engagement level per hotel) differently, which explains the differential behavioral responses. When we examine overall booking behavior beyond the treatment day, we find that delaying price disclosure reduces the overall booking probability for registered users while increasing it for unregistered users. Furthermore, we find evidence of a screening effect: delaying price disclosure deters users with lower willingness to pay from returning, while those with higher willingness to pay remain unaffected. Our findings make a significant contribution to the literature on price obfuscation and information disclosure, while also offering valuable managerial implications for platforms and online retailers.

Keywords: Delaying Price Disclosure, Price Obfuscation, Information Disclosure, Digital Platforms, Consumer Search Behavior, Consideration Set, Field Experiment