Actual market prices and consumer price knowledge

This paper examines consumer price knowledge by comparing the actual market prices and consumer price estimates in the Finnish grocery market. Although the individual price estimates of consumers were found to differ significantly from the actual market prices, the medians of consumer price estimates and market prices were very close to each other for most of the products in our data. The study indicates that consumer price knowledge is not as poor as previously suggested by the results of point-of-purchase studies. We suggest that at least part of the weakness in consumer price knowledge can be explained by differences in market price variation.