Skip to Main content Skip to Navigation
Journal articles

Failing to Suspect Collusion in Price-Matching Guarantees: Consumer Limitations in Game-Theoretic Reasoning

Abstract : Marketers often commit to matching competitors' prices by offering price-matching guarantees (PMGs). Theory, however, shows that PMGs can either foster price competition and lower market prices or facilitate price collusion and raise market prices. In 3 experiments, we tested if consumers suspect collusion in such tactics and if this suspicion in turn affects their preferences for PMGs. Experiment 1 showed that consumers prefer markets where sellers offer PMGs over those that do not, suggesting little or no suspicion of collusion. Experiment 2 replicated these findings and extended them by showing that although most consumers prefer PMG markets, consumers higher in need for cognition (NFC) do, consistent with the greater suspicion hypothesized, prefer PMG markets more weakly. However, this weakened preference emerged from concerns over lower product quality in PMG markets more so than expectations of unduly high prices. Experiment 3 then tested the collusive potential of PMGs by placing participants in the role of a government regulator charged with finding collusion in various markets. Regardless of explicit primes and NFC, participants perceived PMGs as competitive devices that reduce prices rather than collusive devices that raise them. In contrast to the assumptions underlying game-theoretic models, consumers often lack the strategic sophistication necessary to detect the collusive potential of PMGs, a limitation that implicates legislation to moderate the use of such devices.
Document type :
Journal articles
Complete list of metadata
Contributor : Antoine Haldemann Connect in order to contact the contributor
Submitted on : Friday, February 10, 2012 - 3:22:14 PM
Last modification on : Saturday, June 25, 2022 - 10:53:02 AM





Subimal Chatterjee, Timothy B. Heath, Suman Basuroy. Failing to Suspect Collusion in Price-Matching Guarantees: Consumer Limitations in Game-Theoretic Reasoning. Journal of Consumer Psychology, Elsevier, 2003, vol. 13, issue 3, p. 255-267. ⟨10.1207/S15327663JCP1303_07⟩. ⟨hal-00668854⟩



Record views