Partitioned Pricing Research: A behavioural experiment

Sector: Behavioural and experimental economics | Behavioural Economics | Business and industry | Consumer and firm behaviour | Consumer behaviour and protection | International institutions | NGOs and consumer advocacy | Public Policy | Regulators and government
Client: N/A
Published: August, 2013
Document type: Report 
Tagged: experiments quantitative analysis UK

London Economics was commissioned by the Office of Fair Trading to undertake a behavioural economics study into how partitioned pricing, which is the practice of splitting the price of a good or service into multiple components, affects consumer decision making. The study builds upon earlier research by London Economics for the OFT on the impact of drip pricing, which is a form of partitioned pricing. Both studies show that drip pricing leads to a loss in consumer welfare, and that partitioned pricing practices impact upon consumer search and purchasing behaviour.