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  • November–December 2020
  • Article
  • Marketing Science

Lifting the Veil: The Benefits of Cost Transparency

By: Bhavya Mohan, Ryan W. Buell and Leslie K. John
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Abstract

Firms do not typically disclose information on their costs to produce a good to consumers. However, we provide evidence of when and why doing so can increase consumers’ purchase interest. Specifically, building on the psychology of disclosure and trust, we posit that cost transparency, insofar as it represents an act of sensitive disclosure, fosters trust. In turn, this heightened trust enhances consumers’ willingness to purchase from that firm. In support of this account, we present six studies, conducted in the field and in the lab. A pre-registered field experiment indicated that diners were 21.1% more likely to buy a bowl of chicken noodle soup when a sign revealing its ingredients also included the cafeteria’s costs to make it. Five subsequent online experiments replicated and extended this basic effect, providing evidence of when and why it occurs. Taken together, these studies imply that the proactive revelation of costs can improve a firm’s bottom line.

Keywords

Cost Transparency; Disclosure; Field Experiment; Cost; Trust; Consumer Behavior

Citation

Mohan, Bhavya, Ryan W. Buell, and Leslie K. John. "Lifting the Veil: The Benefits of Cost Transparency." Special Issue on Marketing Science and Field Experiments. Marketing Science 39, no. 6 (November–December 2020): 1033–1201.
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About The Authors

Ryan W. Buell

Technology and Operations Management
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Leslie K. John

Negotiation, Organizations & Markets
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More from the Authors

    • November 2022
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    Opportunity Neglect: An Aversion to Low-probability Gains

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    • August 2022
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    The Bulletproof Glass Effect: Unintended Consequences of Privacy Notices

    By: Aaron R. Brough, David A. Norton, Shannon L. Sciarappa and Leslie K. John
    • March 2022
    • Marketing Letters

    When Less Is More: Consumers Prefer Brands that Donate More in Relative versus Absolute Terms

    By: Elizabeth A. Keenan, Anne V. Wilson and Leslie K. John
More from the Authors
  • Opportunity Neglect: An Aversion to Low-probability Gains By: Emily Prinsloo, Kate Barasz, Leslie K. John and Michael I. Norton
  • The Bulletproof Glass Effect: Unintended Consequences of Privacy Notices By: Aaron R. Brough, David A. Norton, Shannon L. Sciarappa and Leslie K. John
  • When Less Is More: Consumers Prefer Brands that Donate More in Relative versus Absolute Terms By: Elizabeth A. Keenan, Anne V. Wilson and Leslie K. John
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