@article{Disaggregation:2258,
      recid = {2258},
      author = {White, Shannon M},
      title = {When Shrouded Prices Signal Transparency: Consequences of  Price Disaggregation},
      publisher = {University of Chicago},
      school = {Ph.D.},
      address = {2020-06},
      pages = {202},
      abstract = {This dissertation explores the impact of price  disaggregation on disclosure preferences and consumer  choices. Rather than competing on price, firms may make  prices more complex and hence more difficult to compare.  One method for increasing price complexity is  disaggregating (or partitioning) prices, which can  effectively hide prices in plain sight. But how do  consumers react to this type of complexity? 

In Chapter 1,  I first demonstrate across a variety of products that  consumers can have a preference for costly complexity; in  other words, consumers can both prefer more complex  disclosures and show a greater propensity to choose  higher-price (but no higher-quality) options when  disclosures are complex. These preferences are sticky, not  substantially changing after a price-comparison task or  after being warned about downsides of complexity.  Attitudinal measures suggest that general (and potentially  misapplied) beliefs about price disclosures, as well as  overconfidence in price-comparison abilities, are  associated with a preference for costly complexity. 

In  Chapter 2, I explore the robustness of the effect with  abstract scenarios and find similar results. Exploratory  analyses suggest a strong tendency among consumers to infer  meaning from information presented to them—especially among  those who prefer more complex disclosures—suggesting that  some consumers may infer meaning from pricing information  that firms use merely to obfuscate the total price. 

In  Chapter 3, I broaden the scope of choice contexts. First,  because many disclosures in the real world have both  disaggregated prices and the total price, I examine  relative preferences for this type of “combo” disclosure.  Most prefer having both more pricing information  (disaggregated prices) and easier-to-process pricing  information (total price), though a majority prefer the  former to the latter when a tradeoff is forced. Next, I  show that when consumers choose between products that may  have different disclosure types, the presence of at least  one complex disclosure in a choice set significantly  increases the likelihood of consumers choosing higher-price  options; additionally, participants as “sellers” with more  expensive products are slightly more likely to display  prices in complex ways, which makes their products more  likely to be selected by consumers. These findings show how  not all firms in a market need obfuscate the total price in  order to substantially impact consumers’ ability to compare  prices; a few “bad actors” may drive up the average price  paid by consumers. 

Appendices complement key findings in  the main dissertation, including a meta-analysis of  numerous outcomes in the first nine studies (Appendix 1);  supplemental analyses for studies in the main dissertation,  including a demonstration that increasing the price  difference between two options reduces but does not  eliminate the impact of complexity on participants’ ability  to compare prices (Appendix 2); and supplemental studies,  including a factor analysis of general beliefs about  disclosures (Appendix 3). 

The results of this  dissertation suggest that consumers like the information in  complex disclosures but commit computational errors while  believing they will not. Even after experience or when  warned, they maintain preferences that may affect the  consumer decision making process and ultimately cost them.},
      url = {http://knowledge.uchicago.edu/record/2258},
      doi = {https://doi.org/10.6082/uchicago.2258},
}