Do Consumers Prefer Offers that are Easy to Compare? An Experimental Investigation
38 Pages Posted: 8 Feb 2012 Last revised: 4 Mar 2012
Date Written: February 27, 2012
Consumers make mistakes when facing complex purchasing decision problems but if at least some consumers disregard any offers that is difficult to compare with others then firms will adopt common ways to present their offers and thus make choice easier. We design an original experiment to identify consumers’ choice heuristics in the lab. Subjects are asked to choose from menus of offers and we measure the extent to which they favor those offers that are easy to compare with others in the menu. A sufficient number of subjects do so with sufficient intensity for offers presented in common terms to generate higher revenues than offers that are expressed in an idiosyncratic way.
Keywords: Bounded Rationality, Cognitive Limitations, Standards, Consumer Choice, Experimental Economics, Heuristics, Pricing Formats, Spurious Complexity
JEL Classification: D83, L13, D18
Suggested Citation: Suggested Citation