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. 2016 Jul 5;113(27):7323-8.
doi: 10.1073/pnas.1510501113.

Quantity discounts on a virtual good: The results of a massive pricing experiment at King Digital Entertainment

Steven D Levitt  1 , John A List  2 , Susanne Neckermann  3 , David Nelson  4
Affiliations

Quantity discounts on a virtual good: The results of a massive pricing experiment at King Digital Entertainment

Steven D Levitt et al. Proc Natl Acad Sci U S A. .

Abstract

We report on a natural field experiment on quantity discounts involving more than 14 million consumers. Implementing price reductions ranging from 9-70% for large purchases, we found remarkably little impact on revenue, either positively or negatively. There was virtually no increase in the quantity of customers making a purchase; all the observed changes occurred for customers who already were buyers. We found evidence that infrequent purchasers are more responsive to discounts than frequent purchasers. There was some evidence of habit formation when prices returned to pre-experiment levels. There also was some evidence that consumers contemplating small purchases are discouraged by the presence of extreme quantity discounts for large purchases.

Keywords: King; natural experiment; price discrimination; quantity discount; virtual.

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Conflict of interest statement

Conflict of interest statement: D.N. is an employee of King Digital Entertainment, which potentially stands to benefit from the publication of this paper.

Figures

Fig. 1.
Fig. 1.
Quantity discounts presented to customers across treatment arms.
See this image and copyright information in PMC

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