Misperceptions and Firm Strategic Response Paper

Last registered on February 28, 2025
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Pre-Trial

Trial Information

General Information

Title
Misperceptions and Firm Strategic Response Paper
RCT ID
AEARCTR-0015417
Initial registration date
February 21, 2025

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
February 28, 2025, 8:04 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
United States of America
Region

Primary Investigator

Name
Sean Posey
Affiliation
Tennessee State University
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Other Primary Investigator(s)

PI Name
Di Fang
PI Affiliation
University of Florida
Contact Investigator

Additional Trial Information

Status
In development
Start date
2025-03-01
End date
2025-10-31
Keywords
Behavior, Firms & Productivity
Additional Keywords
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
Firms have the ability to influence consumer perceptions of product quality through a variety of
strategies. In this study, we use an incentivized online experiment where participants act as firms to explore
how firms make strategic choices when consumer perceptions of quality are shaped by their decisions. We
compare this scenario to a benchmark in which consumers have perfect information about product quality.
Firms are given the option to invest in either formal, third-party verified labels, or informal, non-certified
labels that lack regulation or verification. Additionally, we investigate how firm behavior changes when
consumer demand follows a traditional demand curve versus a sequential search model, where consumers
gather information incrementally before making purchase decisions.
External Link(s)
Pre-Analysis Plan

Registration Citation

Citation
Fang, Di and Sean Posey. 2025. "Misperceptions and Firm Strategic Response Paper ." AEA RCT Registry. February 28. https://doi.org/10.1257/rct.15417-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
We conduct a 2x2 online experiment. We test how individuals behave when given the ability to endogenously shift consumer perceptions. We test this under two types of demands, continuous and a search algorithm.
Intervention (Hidden)
We designed an app with four simple competitive games using oTree, the code for the app can be
found on GitHub. The app is hosted on Heroku an online cloud platform. Each game is associated with a
different treatment group; Benchmark, Labels, Sequential Search, and Sequential Search with Labels. The
game begins with an introduction that goes through the objective of the game, to obtain the highest profits
through choosing prices, quality, and labels (if the treatment involves labels).
Intervention Start Date
2025-03-01
Intervention End Date
2025-08-01

Primary Outcomes

Primary Outcomes (end points)
Price, Quality, Price-Quality ratio
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We conduct a 2x2 experiment online. Each treatment consists of 5 players competing for the highest profits across 6 rounds of playing. Participants can choose a level of quality, price, and whether or not to invest in labels that shift consumer perception (increase demand)
Experimental Design Details
Randomization Method
We post the game online, each game is titled identically and given the same description. We are unable to collect a sample and randomly assign treatment, however since the games will be indistinguishable from each other it can be considered as good as random.
Randomization Unit
individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
2000 individuals
Sample size: planned number of observations
2000 individuals
Sample size (or number of clusters) by treatment arms
500 individuals per treatment
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
0.1 standard deviations
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
University of Florida
IRB Approval Date
2024-05-28
IRB Approval Number
ET00041358
Analysis Plan

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Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials