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Good-Looking Prices

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Listed:
  • Bradley J. Ruffle
  • Arie Sherman
  • Zeev Shtudiner

Abstract

We design a field experiment to test for price discrimination at seemingly highly competitive Israeli produce markets. We trained 90 buyers and sent them to produce markets across Israel. After verifying a product’s posted price, they asked for a discount on a one-kilogram or one-unit purchase. Vendors employ third-degree price discrimination: women are offered larger and more frequent discounts than men, and the more attractive the female buyer, the larger and more frequent the discount offered. Male buyers do not benefit from this beauty discount. No other buyer characteristic is a significant predictor of the likelihood or size of a discount. To understand our findings, we provide a more nuanced view of these markets that includes search costs and considerable vendor price-setting discretion.

Suggested Citation

  • Bradley J. Ruffle & Arie Sherman & Zeev Shtudiner, 2020. "Good-Looking Prices," Department of Economics Working Papers 2020-02, McMaster University.
    • Handle: RePEc:mcm:deptwp:2020-02
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    References listed on IDEAS

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    Cited by:

    1. Zeev Shtudiner, 2020. "The impact of attractiveness on employability: Gender differences in peer effects," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(8), pages 1613-1620, December.
    2. Du, Ninghua & Song, Fei & Cadsby, C. Bram, 2022. "You cannot judge a book by its cover: Evidence from a laboratory experiment on recognizing generosity from facial information," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 100(C).
    3. Shtudiner, Zeev & Klein, Galit, 2020. "Gender, attractiveness, and judgment of impropriety: The case of accountants," European Journal of Political Economy, Elsevier, vol. 64(C).

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    More about this item

    Keywords

    experimental economics; beauty; price discrimination; negotiation; price discounts; search costs;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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