There is field evidence from online procurement for services to suggest that some suppliers bid excessively low prices that can only be rationalized through subsequent surcharges. Many factors can affect surcharging in the field, including widely studied aspects such as cost overruns, the expected cost of litigation or reputation. We conduct a pre-registered online experiment to evaluate which social-norm-related aspects of the decision environment drive surcharging. We develop a stylized procurement game and disentangle the role of three additional factors: (i) transparent pricing, (ii) fairness, and (iii) competition. We find that norms about transparency and fairness influence surcharging and interact with one another. Competitive pressure does not crowd out social norms per se.

Almost overnight, the 2012 hit “Gangnam Style” made a district in South Korea’s capital Seoul world famous. Using a difference-in-differences framework and data on all real estate purchases in Korea’s megacity between 2009 and 2022, we examine how Gangnam’s sudden popularity affected its housing market. Our results show that after the release of the song prices increased significantly while the number of transactions significantly declined – a clear indication that the market was driven by rapidly adjusting expectations, a view that is supported by the concomitant and significant increase in the number of available hotel rooms in Gangnam. Our analysis reveals that real estate market participants attach great importance to art and culture when assessing the quality of life in an urban center.