To Buy or Not to Buy? Shrouding and Partitioning of Prices in an Online Shopping Field Experiment

54 Pages Posted: 21 Feb 2019

See all articles by Markus Dertwinkel-Kalt

Markus Dertwinkel-Kalt

University of Cologne

Mats Koester

Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE)

Matthias Sutter

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods; University of Cologne - Department of Economics

Date Written: 2019

Abstract

We examine whether shrouding surcharges or partitioning prices raises demand in online shopping where consumers have very low costs of cancelling an initiated purchase process. In a field experiment with more than 34,000 consumers, we find that consumers in the online shop of a large German cinema initiate a purchase process more often when surcharges are shrouded or indicated separately, but they also drop out more often when the overall price becomes known at the check-out. In sum, the demand distribution is independent of the price presentation. This result qualifies previous findings on the effectiveness of such pricing practices and can be rationalized through low cancellation costs.

Keywords: salience, inattention, shrouding, price partitioning, field experiment

JEL Classification: D810, C930

Suggested Citation

Dertwinkel-Kalt, Markus and Koester, Mats and Sutter, Matthias, To Buy or Not to Buy? Shrouding and Partitioning of Prices in an Online Shopping Field Experiment (2019). CESifo Working Paper No. 7475. Available at SSRN: https://ssrn.com/abstract=3338830

Markus Dertwinkel-Kalt (Contact Author)

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Mats Koester

Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE) ( email )

Universitaetsstr. 1
Duesseldorf, NRW 40225
Germany

Matthias Sutter

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

University of Cologne - Department of Economics

Cologne, 50923
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
17
Abstract Views
78
PlumX Metrics
!

Under construction: SSRN citations will be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information