Cancel the deal? An experimental study on the exploitation of irrational consumers

Alexander Cappelen, Stefan Meissner () and Bertil Tungodden
Additional contact information
Stefan Meissner: Factworks GmbH, https://sites.google.com/view/stefanmeissner/startseite

No 6/2023, Discussion Paper Series in Economics from Norwegian School of Economics, Department of Economics

Abstract: Consumers can sometimes be exploited because they make mistakes in their valuation of products. We present the results from a large-scale experimental study that examines whether third-party spectators from the general population in the United States cancel a deal where a buyer has made a mistake in the valuation of a product and agreed to pay more for the product than the seller knows it is worth. We find that the majority of the spectators cancel such deals even when the seller’s involvement is limited to accepting a proposal made by the buyer. A substantial share of these spectators are also willing to fine the seller. However, a large minority of the spectators are willing to uphold the deal even when the seller has proposed the deal and obfuscated the information provided to the buyer. Our results shed new light on when people view market transactions as acceptable and their attitudes to government regulation of businesses.

Keywords: Consumers; irrational behavior (search for similar items in EconPapers)
JEL-codes: D63 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2023-04-06
New Economics Papers: this item is included in nep-com, nep-exp and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://hdl.handle.net/11250/3062246 Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:nhheco:2023_006

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Discussion Paper Series in Economics from Norwegian School of Economics, Department of Economics NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway. Contact information at EDIRC.
Bibliographic data for series maintained by Karen Reed-Larsen ().