Scandinavian Working Papers in Economics
Discussion Paper Series in Economics,
Norwegian School of Economics, Department of Economics
No 15/2025: Do Informed Consumers Pay Less? Evidence from a Survey with Linked Grocery Purchase Data
Richard Friberg (), Emil M. S. Halseth (), Frode Steen () and Simen A. Ulsaker ()
Additional contact information
Richard Friberg: Dept. of Economics, Stockholm School of Economics, Postal: Stockholm School of Economics, Department of Economics, PO Box 6501, SE-113 83 Stockholm , Sweden,
Emil M. S. Halseth: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Frode Steen: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Simen A. Ulsaker: Faculty of Social Sciences, OsloMet, Postal: OsloMet, Faculty of Social Sciences, Pilestredet 35, 0166 Oslo, Norway
Abstract: This paper examines how consumer price knowledge affects shopping behavior and the prices consumers pay in grocery markets. We combine survey-based price recall data from over 2000 Norwegian households — yielding over 70 000 price recalls across two grocery chains and 24 products—with 18 months of of linked individual-level transaction histories. Better-informed consumers—those who recall prices more accurately—pay lower prices by timing purchases to coincide with sales. A 10 percentage point increase in price knowledge (approximately the interquartile range) is associated with a 1:3 percentage point reduction in prices paid. Our results provide direct support for the central mechanism in Varian’s (1980) model of sales: that informed consumers pay lower prices by exploiting temporary discounts. We also find that consumers who are more active in seeking information about prices have higher price knowledge. Taken together, and with the caveat that we are only considering consumer responses here, our results suggest that policies or tools that help consumers learn about prices may be effective in enhancing competition. Our findings also speak to a marketing literature that seeks to measure and explain consumer price knowledge. By linking survey data to actual shopping behavior, we contribute to this literature by demonstrating that shopping behavior and attitudes are stronger predictors of price knowledge than demographic characteristics.
Keywords: Price Knowledge; Price learning effort; Price Competition; Sales Utilization; Search costs
Language: English
79 pages, July 14, 2025
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