Do smart consumers recognise a good deal when they see one? IQ and sensitivity to price promotions in the online horse betting market
(R2024-122631)

AUTHORS

Jani Saastamoinen, University of Eastern Finland; Niko Suhonen, University of Eastern Finland; Tuomo Kainulainen, University of Eastern Finland; David Forrest, University of Liverpool; Jussi Palomäki, University of Helsinki; Tommi Laukkanen, University of Eastern Finland; Mika Kortelainen, Univerity of Turku

ABSTRACT

This paper demonstrates that the individual’s cognitive ability, as measured by IQ, predicts the consumer’s responses to price promotions in the market for horse betting products. We use a large-scale data set from Finland, which amalgamates all horse wagering product purchases made in a monopolistic market over a one-year period, IQ test scores from the Finnish Defence Forces, and administrative registry data on the socioeconomic characteristics (e.g. personal income) of those consumers. Our results indicate that high-IQ individuals increase their consumption of horse betting products whose price has fallen. This result holds regardless of the consumer’s socioeconomic background.