nep-mkt New Economics Papers
on Marketing
Issue of 2016‒08‒28
two papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The Surplus Identification Task and Limits to Multi-Attribute Consumer Choice By Lunn, Pete; Bohacek, Marek; McGowan, Feidhlim
  2. The Impact of Price Discrimination on Major League Baseball Team’s Revenue By Brian P Soebbing; Nicholas M Watanabe; Chad S Seifried

  1. By: Lunn, Pete; Bohacek, Marek; McGowan, Feidhlim
    Abstract: We present a novel experimental method for investigating consumer choice. The Surplus Identification (S-ID) task is inspired by studies of detection in perceptual psychophysics. It employs a forced-choice procedure, in which participants must decide whether a novel product is worth more or less than the price at which it is being offered, that is, whether there is a positive or negative surplus. The SI-D task reveals how precision, bias and learning vary across attribute and price structures. We illustrate its use by testing for cognitive capacity constraints in multi-attribute choice in three separate experiments, with implications for models of bounded rationality and rational inattention. As the number of product attributes rises from one to four in the S-ID task (Experiment 1), participants cannot integrate additional information efficiently and they display systematic, persistent biases, despite incentivised opportunities to learn. Experiment 2 demonstrates how the S-ID task can be used to track learning and serves as a robustness check for the findings of Experiment 1. Experiment 3 adapts the S-ID task to test accuracy of surplus identification when multiple attributes are perfectly correlated. The S-ID task also has the potential to test multiple aspects of consumer choice models and to test specific hypotheses about the cognitive mechanisms behind surplus identification.
    Date: 2016–07
  2. By: Brian P Soebbing (Faculty of Physical Education and Recreation, University of Alberta); Nicholas M Watanabe (Department of Health, Exercise Science, and Recreation Management, University of Mississippi); Chad S Seifried (School of Kinesiology, Louisiana State University)
    Abstract: The empirical evidence supporting the impact that second degree price discrimination has on a firm’s revenue has received little attention. The present research examines ticket data from Major League Baseball from 1990 through 2010. Estimating a two-staged least squares model, we find neither price discrimination variable has an impact on team revenues. However, we find that both of these price discrimination variables impact revenues when examining different facility types. We discuss the impact on the role that price behavior and venues have on price dispersion.
    Keywords: Price Discrimination, Price Dispersion, Information, Revenue, Facilities, Tickets
    JEL: D42 L12 L83
    Date: 2016–08

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