Good-Looking Prices

13 Pages Posted: 17 Mar 2020

See all articles by Bradley J. Ruffle

Bradley J. Ruffle

McMaster University

Arie Sherman

affiliation not provided to SSRN

Ze'ev Shtudiner

Ariel University - Department of Economics

Date Written: February 19, 2020

Abstract

We design a field experiment to test for price discrimination at seemingly highly competitive Israeli produce markets. We trained 90 buyers and sent them to produce markets across Israel. After verifying a product’s posted price, they asked for a discount on a one-kilogram or one-unit purchase. Vendors employ third-degree price discrimination: women are offered larger and more frequent discounts than men, and the more attractive the female buyer, the larger and more frequent the discount offered. Male buyers do not benefit from this beauty discount. No other buyer characteristic is a significant predictor of the likelihood or size of a discount. To understand our findings, we provide a more nuanced view of these markets that includes search costs and considerable vendor price-setting discretion.

Keywords: experimental economics, beauty, price discrimination, negotiation, price discounts, search costs

JEL Classification: C91, D01

Suggested Citation

Ruffle, Bradley J. and Sherman, Arie and Shtudiner, Ze'ev, Good-Looking Prices (February 19, 2020). Available at SSRN: https://ssrn.com/abstract=3541247 or http://dx.doi.org/10.2139/ssrn.3541247

Bradley J. Ruffle (Contact Author)

McMaster University ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

HOME PAGE: http://https://socialsciences.mcmaster.ca/people/ruffle-bradley

Arie Sherman

affiliation not provided to SSRN

Ze'ev Shtudiner

Ariel University - Department of Economics ( email )

Ariel, 40300
Israel

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