The impact of price frames on consumer decision making: Experimental evidence

We present a laboratory experiment on the impact of price framing on consumer decision making. Consumer subjects face a search market where two sellers offer a homogeneous good. We examine six different price frames with linear perunit pricing (that is displayed as such) serving as a benchmark. We find that all frames deviating from the benchmark have some negative impact on consumer decision making. The most striking result concerns drip pricing (where prices are decomposed into three elements and “dripped in” during the purchasing process). While leaving the actual decision problem unchanged, drip pricing wipes out 22% of consumer surplus. JEL classification numbers: C72, C92, D21, D43