Join us for the next ICES Experimental Economics Seminar of the semester, featuring Nina Mazar.
Professor Mazar, of the University of Toronto, will discuss her paper Probabilistic Purchasing – When Retailing and Las Vegas Meet. The talk will take place on Friday, March 8th, from 4:00 to 5:30pm, in room 648 of the Truland Building, Arlington campus.
A number of retailers offer gambling or lottery type of price promotions with a chance to receive one’s entire purchase for free. While these retailers seem to share the intuition that probabilistic discounts are attractive to consumers, it is unclear how they compare to traditional sure discounts of equal expected value. We compared these two price promotions across five experiments in the field and in the lab. In a nutshell, we found that consumers strongly preferred a probabilistic discount over a sure discount, and that this preference seemed to be particularly driven by the disutility of paying, thereby adding support to the concept of the “pain of paying” in purchase transactions. Finally, our results suggest that purchases, where the payment is coupled with the acquisition or consumption of a product, might be coded as a loss at the point of purchase rather than a gain or a neutral exchange.
Visit the Seminar schedule to learn more about upcoming speakers.