Evanston, Ill. - A study by the Kellogg School of Management at Northwestern University finds that when it comes to auto repairs, women who don't appear knowledgeable about cost may end up paying more than men. However, gender differences disappear when customers mention an expected price for the repair.
The study, Repairing the Damage: The Effect of Price Expectations on Auto-Repair Price Quotes, was conducted by Kellogg professors Meghan Busse and Florian Zettelmeyer, and Northwestern University Ph.D. student Ayelet Israeli in collaboration with AutoMD.com, an online automotive repair information site.
The researchers set up field experiments to test the effects of men and women calling auto repair shops to ask for quotes on a 2003 Toyota Camry radiator replacement. The callers either appeared well-informed of the market price ($365), misinformed with expectations of a higher-than-average price ($510), or completely uninformed, with no price expectation.
Among those who appeared uninformed, women fared worse and were consistently quoted higher prices. Women who called and expressed knowledge of the market price received quotes in line with that expectation. Men, on the other hand, were quoted the same price whether they said, I have no idea what this costs, or I know the average cost is $365. As expected, both men and women were quoted significantly higher-than-average prices when they said their expected price was $510.
"This comes down to stereotypes and assumptions," said Busse, associate professor of management and strategy. "Our findings suggest that auto shops may assume men know the market price for a given repair, so they automatically grant it. However, they may not expect women to be knowledgeable in this area, so the perception is they can charge them more."
When it came to negotiating for a lower price, many shops were unwilling to budge. However, when they did, it was more likely to happen for women than men. In fact, 35 percent of women were able to get their requested price met, compared to 25 percent of men.
Its kind of an ironic twist, said Zettelmeyer, the Nancy L. Ertle Professor of Marketing. The same kind of cultural expectations that cause repair shops to overcharge women are probably also responsible for showing preference toward women in negotiations.
