Price complexity and buyer confusion in markets

Kalaycı, Kenan

doi:10.1016/j.jebo.2015.01.001

Cited by 28 publications

(2 citation statements)

References 24 publications

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“…Economics experiments (see, e.g., Kalayci andPotters 2011 andKalayci 2011) show that increasing the number of product attributes or price scheme dimensions can create confusion and lead to suboptimal consumer choices. We explore two sources of consumer confusion due to price presentation: frame differentiation (when firms adopt different frames) and frame complexity (when firms use a common but complex frame).…”

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Price Competition with Consumer Confusion

2013

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T his paper proposes a model in which identical sellers of a homogeneous product compete in both prices and price frames (i.e., ways to present price information). Frame choices affect the comparability of price offers and may cause consumer confusion and lower price sensitivity. In equilibrium, firms randomize their frame choices to obfuscate price comparisons and sustain positive profits. The nature of the equilibrium depends on whether frame differentiation or frame complexity is more confusing. Moreover, an increase in the number of competitors induces firms to rely more on frame complexity, and this may boost industry profits and lower consumer surplus.

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Price Competition with Consumer Confusion

2013

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“…See Carlin (2009) for a theoretical argument. Kalayci (2015) 11. Calculating the probability of a refund was more complex for the Pinnacle dataset.…”

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confidence: 99%

Returns on complex bets: evidence from Asian Handicap betting on soccer

Hegarty,

Whelan

2024

RBF

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PurposeThe Asian Handicap is a way to bet on soccer matches where payouts depend on an adjustment to the score that favors the weaker team. These bets can feature the possibility of all or half the bet being refunded and this makes the calculation of their expected return more complex than for traditional betting on a home win, away win or draw. We examine the behavior of odds in this market.Design/methodology/approachIn addition to a using well-known publicly available source of information on Asian Handicap betting odds – which provides the average odds across a range of bookmakers – we have also sourced a large dataset of Asian Handicap odds offered by an individual bookmaker.FindingsWe show that bettors systematically lose more money on Asian Handicap bets where refunds are not possible than when it is possible to obtain a half refund. We also show that bets with the possibility of a full refund have the lowest loss rates. We demonstrate that this pattern of differences in loss rates across bets is predictable based on the odds quoted. This pattern could represent preferences, with gamblers disliking bets featuring potential refunds, but we argue the evidence points more towards gamblers incorrectly calculating expected loss rates.Originality/valueDespite being one of the world's largest betting markets, there has been almost no previous research on the properties of the Asian Handicap soccer betting. Our finding of clear differences in returns on simultaneously available bets on the same team is also a new anomaly previously undocumented in any research on sports betting.

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Probabilistic Choice and Optimal Contracts

Basov

2016

Studies in Economic Theory

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Price complexity and buyer confusion in markets

Cited by 28 publications

References 24 publications

Price Competition with Consumer Confusion

Price Competition with Consumer Confusion

Returns on complex bets: evidence from Asian Handicap betting on soccer

Probabilistic Choice and Optimal Contracts

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