Price Salience and Product Choice
We study the effect of price salience on whether a product is purchased and, conditional on purchase, the quality purchased. Consistent with our theoretical predictions, we find that making the full purchase price salient to consumers reduces both the quality and quantity of goods purchased. The effect of salience on quality accounts for at least 28% of the overall revenue decline. Evidence shows that the effects persist beyond the first purchase and impact even experienced users. Detailed click-stream data shows that price-obfuscation makes price comparisons difficult and results in consumers spending more than they otherwise would. We also find that sellers respond to the increased price obfuscation by listing higher quality tickets.
We are grateful to executives and employees at Stubhub for sharing the data for this study. We thank numerous seminar participants for helpful comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
The views expressed herein are those of the authors and do not necessarily reflect the views of their employers, eBay, or the National Bureau of Economic Research.Steven Tadelis
Steve Tadelis worked and consulted for eBay from August 2011 through February 2016. This research was done after that period and was not paid for or supported by eBay funds.
Tom Blake & Sarah Moshary & Kane Sweeney & Steve Tadelis, 2021. "Price Salience and Product Choice," Marketing Science, vol 40(4), pages 619-636.