Price lower and then higher or price higher and then lower?

Data resulting from an economic experiment testing the hypothesis that, if consumers do not have well defined preferences and as a result their valuation of a new product is shaped by past experiences of prices, it may be more profitable for firms to follow a strategy of pricing high and then lower. We ran an individual choice experiment with a posted offer market setup, where different dynamic pricing strategies were implemented. We find evidence of preference shaping and the profitability of a ‘high low’ pricing strategy under a wide range of assumptions. The experiment consisted of repeated opportunities to purchase goods in an individual task with a posted offer market frame with only one product involved - referred to as the individual posted offer market. <p>The ESRC Centre for Competition Policy (CCP) at the University of East Anglia (UEA) undertakes interdisciplinary research into competition policy and regulation that has real-world policy relevance without compromising academic rigour. It prides itself on the interdisciplinary nature of the research and the members are drawn from a range of disciplines, including economics, law, business and political science. The Centre was established in September 2004, building on the pre-existing Centre for Competition and Regulation (CCR), with a grant from the ESRC (Economic and Social Research Council). It currently boasts a total of 26 faculty members (including the Director and a Political Science Mentor), 4 full- and part-time researchers and 23 PhD students. </p>