Estimating Repugnance Toward Price Gouging With Incentivized Consumer Reports

Abstract

Thirty-four states prohibit price increases during emergencies and many individuals take costly actions to report violators. We use an experiment to measure the willingness to pay to report sellers who increase prices of personal protective equipment. Over 75% of subjects pay to report even if others are willing to purchase at those prices. The willingness to pay is polarized and increases with price. We argue that reports contain information about repugnance—a desire to prevent third-party transactions at increased prices. The mechanism driving reports varies by good: we find a distaste for profits for hand sanitizers but not for face masks.