Price norms and consumer behaviour (joint with Sandra Sequeira and Mattia Nardotto)
Abstract : This paper examines empirically the role of memory in driving consumer choice. Leveraging a large dataset of grocery shopping in the UK, we show that consumers' decisions are shaped by their past price experiences as well as by the contextual cues that retrieve them. In line with a model where memory-based price norms are references for valuation, we find that: i) demand is inelastic for small departures from experienced prices but is highly elastic for large price surprises, and ii) contextual cues, such as similar goods being on sale, act as reminders that affect price sensitivity and choice. These findings suggest that price sensitivity is malleable, and help shed light on puzzling patterns of demand such as the large share of purchases done on sale.
* 본 세미나는 VEAEBES(Virtual East Asia Experimental and Behavioral Economics Seminar series) 주최로 열리는 세미나입니다.
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