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Abstract
In a field experiment in Uganda, we find that demand after a free distribution
of three health products is lower than after a sale distribution. This contrasts
with work on insecticide-treated bed nets, highlighting the importance of
product characteristics in determining pricing policy. We put forward a model
to illustrate the potential tension between two important factors, learning and
anchoring, and then test this model with three products selected specifically
for their variation in the scope for learning. We find the rank order of shifts in
demand matches with the theoretical prediction, although the differences are
not statistically significant.