Repairing the Damage: The Effect of Price Expectations on Auto-Repair Price Quotes

58 Pages Posted: 20 Jun 2013 Last revised: 3 May 2021

See all articles by Meghan R. Busse

Meghan R. Busse

University of California, Berkeley - Haas School of Business

Ayelet Israeli

Harvard Business School - Marketing Unit

Florian Zettelmeyer

Northwestern University - Kellogg School of Management

Date Written: June 2013

Abstract

In this paper we investigate whether sellers treat consumers differently on the basis of how well-informed consumers appear to be. We implement a large-scale field experiment in which callers request price quotes from automotive repair shops. We show that sellers alter their initial price quotes depending on whether consumers appear to be well-informed, uninformed, or poorly informed about market prices. We find that repair shops quote higher prices to callers who cite a higher expected price. We find that women are quoted higher prices than men when callers signal that they are uninformed about market prices. However, gender differences disappear when callers mention an expected price for the repair. Finally, we find that repair shops are more likely to offer a price concession if asked to do so by a woman than a man.

Suggested Citation

Busse, Meghan R. and Israeli, Ayelet and Zettelmeyer, Florian, Repairing the Damage: The Effect of Price Expectations on Auto-Repair Price Quotes (June 2013). NBER Working Paper No. w19154, Available at SSRN: https://ssrn.com/abstract=2282356

Meghan R. Busse (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

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HOME PAGE: http://faculty.haas.berkeley.edu/meghan/index.html

Ayelet Israeli

Harvard Business School - Marketing Unit ( email )

Soldiers Field
Boston, MA 02163
United States

Florian Zettelmeyer

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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