Rebates, Matches, and Consumer Behavior

An experiment conducted to examine the effects of different discount formats on consumer purchases is reported. Participants made a series of purchase decisions for chocolate bars given (1) “rebates” from the listed price, (2) “matching” quantities of chocolates for each bar purchased, and (3) simple price reductions. Contrary to standard theoretical predictions, and consistent with results in the context of charitable contributions by Eckel and Grossman (2003), we find that participants purchase significantly more chocolate bars under a “matching” sales format than under a comparable “rebate” format. Inattention to the net consequences of decisions, as well as some “rebate aversion,” explain the preference for matching discounts.