Remember the “employee pricing” that GM, Ford and Chrysler offered to everyone back in 2005? It turns out that the discounts weren’t so great, but they did boost sales.

In the weeks after the employee-pricing promotion launched, a new study calculates,

Chrysler’s prices increased by an estimated 2.5 percent, and Ford’s prices fell by 0.2 percent. During the same period GM’s prices increased by 0.3%.

The researchers are talking about actual selling prices, not list prices. Maybe, the paper suggests, consumers bought the hype and really believed that the “employee” price was the best the Big Three would ever offer. Thus, buyers didn’t negotiate as hard.

All three automakers did report an increase in sales during the promotion. In the academic literature, the employee pricing ads functioned as  a “price cue,” much like a “SALE” sign in a department store. And such gimmicks often work. The paper concludes:

Because features  of the auto industry make it difficult for customers to be fully informed about prices, customers responded to the price cue by increasing their purchases, even on models for which prices went up.

We conclude that customers can be influenced by price cues, even in a market for an expensive purchase, where the gain to having accurate price information is high and where customers expend effort searching for that information. The characteristics of pricing in the car industry — that prices are negotiated, that they are made up of multiple components, that they change unpredicatably — make the search for price information by customers less than fully revealing.

Of course, the department store experience tells  us that constant “SALE” signs eventually lose their effectiveness. So if the auto industry ever tries this promotion again, consumers might wise up.

The paper’s authors are Meghan R. Busse  and Florian Zettelmeyer  of the University of California at Berkeley, and Duncan Simester  of the Massachusetts Institute of Technology.