Repairing the Damage: The Effect of Price Knowledge and Gender on Auto Repair Price Quotes

Abstract

The authors investigate whether sellers treat consumers differently on the basis of how well informed consumers appear to be. They implement a large-scale field experiment in which callers request price quotes from automotive repair shops. The authors show that sellers alter their initial price quotes depending on whether consumers appear to be correctly informed, uninformed, or misinformed about market prices. The authors find that repair shops quote higher prices to callers who cite a higher benchmark price and that women are quoted higher prices than men when callers signal that they are uninformed about market prices. However, gender differences disappear when callers mention a benchmark price for the repair. Finally, the authors find that repair shops are more likely to offer a price concession if asked to do so by a woman than if asked by a man.