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How Do Shoppers Respond to Noisy Signals on Price Changes? Evidence from a Field Experiment in Online Supermarket Shopping

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  • Kfir Eliaz
  • Orli Oren‐Kolbinger
  • Sarit Weisburd

Abstract

What is the effect on the demand for both discounted and nondiscounted products, when promotional material informs shoppers that some product categories feature discounts? We address this question by conducting a field experiment on a website for online grocery shopping. We find that shoppers who had purchased in a certain food category prior to the experiment responded to noisy promotional information by purchasing items in the discounted category that they had already purchased in the past, regardless of whether the item purchased was currently discounted. Our results suggest that coarse information on discounts increases both consumer spending and seller revenue.

Suggested Citation

  • Kfir Eliaz & Orli Oren‐Kolbinger & Sarit Weisburd, 2024. "How Do Shoppers Respond to Noisy Signals on Price Changes? Evidence from a Field Experiment in Online Supermarket Shopping," Journal of Industrial Economics, Wiley Blackwell, vol. 72(2), pages 965-995, June.
    • Handle: RePEc:bla:jindec:v:72:y:2024:i:2:p:965-995
    DOI: 10.1111/joie.12378
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    References listed on IDEAS

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    1. Sofronis Clerides & Pascal Courty, 2017. "Sales, Quantity Surcharge, and Consumer Inattention," The Review of Economics and Statistics, MIT Press, vol. 99(2), pages 357-370, May.
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    3. Navdeep S. Sahni & Dan Zou & Pradeep K. Chintagunta, 2017. "Do Targeted Discount Offers Serve as Advertising? Evidence from 70 Field Experiments," Management Science, INFORMS, vol. 63(8), pages 2688-2705, August.
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