The Impact of Price Disclosure on Dynamic Shopping Decisions

Meteor Research Memoranda 2005-006

29 Pages Posted: 27 Feb 2005

See all articles by Benedict G. C. Dellaert

Benedict G. C. Dellaert

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); Erasmus Research Institute of Management (ERIM)

Vladislav Y. Golounov

Lukol Networks

Jaideep Prabhu

Imperial College Business School; University of Cambridge - Judge Business School

Date Written: February 2005

Abstract

A potentially powerful way to assist consumers in making dynamic shopping decisions is to disclose price information to them before they shop, for example by posting prices on the Internet. This paper addresses the differential impact of disclosing either only current, or both current and future prices, on consumer shopping decisions in multi-period tasks involving multiple product purchases. In the context of an Internet-based experiment, we find that consumer expenditure deviates more strongly from that of a normative model when both current and future prices are disclosed than if only current prices are disclosed. We investigate the behavioral effects underlying this finding by estimating a model that allows for variations in consumer discounting, strength of store price format preferences, as well as choice consistency between different price disclosure conditions.

Keywords: Consumer behavior, Dynamic choice models, Consumer decision-making, Price disclosure

JEL Classification: M31

Suggested Citation

Dellaert, Benedict G. C. and Golounov, Vladislav Y. and Prabhu, Jaideep and Prabhu, Jaideep, The Impact of Price Disclosure on Dynamic Shopping Decisions (February 2005). Meteor Research Memoranda 2005-006, Available at SSRN: https://ssrn.com/abstract=672083 or http://dx.doi.org/10.2139/ssrn.672083

Benedict G. C. Dellaert (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Vladislav Y. Golounov

Lukol Networks ( email )

Frankenlaan 33
5037 KE Tilburg
Netherlands
+31 13 4675388 (Phone)

Jaideep Prabhu

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom
+44 20 7594 9109 (Phone)
+44 20 7823 7685 (Fax)

University of Cambridge - Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom

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