Credit and debit cards are very common and convenient methods of payment, but some research suggests that shopping with cards makes consumers spend more than they otherwise would with cash. In an auction experiment, Prelec and Simester (2001) found evidence of a large credit card premium,but their experiment could not identify whether the credit card premium arises due to a pure plastic effect or the effect of delayed payments. There are two key differences between credit cards and cash: the timing of payments and the physical form. To identify what I call the plastic effect, I held a similar auction experiment and assigned each subject one of two payment methods: cash or debit card. In a sealed-bid uniform price auction, I found little evidence of a plastic effect.
