Do Cost-Based Pricing Biases Persist in Laboratory Markets?

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.