Previous research indicates that consumers often exhibit surprisingly poor knowledge of product prices. The present study investigates whether price knowledge, as measured by reference price accuracy, is related to price-sensitivity as measured by the price-elasticity of demand. We hypothesize that consumers are most knowledgeable regarding the prices of goods for which demand is most price-elastic. Using a new data set containing a wide array of goods and services, we find significant correlations between price-elasticity and two measures of reference price accuracy. Additionally, price knowledge is found to be higher among teens and males than among older adults and females, respectively.
Eisenhauer, J and Principe, K (2009), "Price Knowledge and Elasticity", Journal of Empirical Generalisations in Marketing Science, Vol. 12, No. 2
Price Elasticity, Price Knowledge, Reference Price