On Another Form of Price Asymmetry: Detection at a Popular Restaurant Chain

• Activity Number: 74
• Type: Contributed
• Date/Time: Sunday, August 1, 2010 : 4:00 PM to 5:50 PM
• Sponsor: Business and Economic Statistics Section
• Author(s): Leo T. Upchurch*+ and Chia L. Chen
• Companies: Tuskegee University and Tuskegee University
• Keywords: consumer expectation ; PRICE ASYMMETRY ; PROPORTIONALITY ; ELEMENTARY NOTIONS ; STATISTICS / MATHEMATICS

Abstract

Asymmetric pricing is the phenomenon where prices rise more readily than they fall. This is the usually accepted definition, but in our case, we are extending the meaning to include situations in which the per unit cost of a good or service (chili in our case) is greater when it is served in a larger serving dish. When the price of an item or service increases, consumers expect a proportional increase in the amount, size, or service. If such proportionality is not given, there should at the very least be some compelling explanation. Our results show asymmetric pricing as we define it, in the cost of chili served in different size containers in two popular restaurant chains. The most obvious implication is that both chains appear to be profiting more handsomely than they should without giving the 'all-important' customer a 'fair shake'.