Estimating price elasticity as commonly introduced in marketing textbooks is unrealistically simplistic. Actual estimation issubject to numerousconfounding factors. Generally, true price elasticity is not known and, thus, it is not possible to quantify deviation between estimated and true price elasticity. This study uses a simulation gaming platform where true price elasticity is known to compare estimated and true price elasticity. The results suggest that the simple formula and total revenue–price relationship estimation methods for price elasticity are subject to considerable error.
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