Title

Do Cost-Based Pricing Biases Persist in Laboratory Markets?

Department/School

Accounting

Date of this version

11-1999

Document Type

Article

Keywords

Cost Accounting Systems, Pricing Decisions, Laboratory Markets

Abstract

Past accounting experiments have demonstrated significant effects of absorption vs variable costing systems on pricing decisions, but in individual settings that suppressed market features. The main finding of the current study is that a cost-based pricing bias did not persist in laboratory product markets. Given the opportunity to learn from profit and market feedback, sellers revised their price offers toward optimum in a manner that compensated for absorption vs variable cost signals. The effects of demand conditions, as revealed through actual trades, dominated the effects of alternative costing systems.

Published in

Accounting, Organizations and Society

Citation/Other Information

PII: S0361-3682(99)00009-4

Accounting, Organizations and Society, 1999, vol. 24, pp. 717-739.