NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

Meghan R. Busse, Ayelet Israeli, Florian Zettelmeyer

NBER Working Paper No. 19154
Issued in June 2013
NBER Program(s):Industrial Organization

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.

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Document Object Identifier (DOI): 10.3386/w19154

Published: Meghan R. Busse, Ayelet Israeli, and Florian Zettelmeyer (2017) Repairing the Damage: The Effect of Price Knowledge and Gender on Auto Repair Price Quotes. Journal of Marketing Research: February 2017, Vol. 54, No. 1, pp. 75-95.

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