Consumer exploitation and notice periods

Takeshi Murooka, Marco Schwarz

Firms often set long notice periods when consumers cancel a contract, and sometimes do so even when the costs of changing or canceling the contract are small. We investigate a model in which a firm offers a contract to consumers who may procrastinate canceling it due to naive present-bias. We show that the firm may set a long notice period to exploit naive consumers.

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Year of publication:	2018
Authors:	Murooka, Takeshi ; Schwarz, Marco
Publisher:	Munich, Germany : Collaborative Research Center Transregio 190
Subject:	notice periods \| procrastination \| present bias \| time inconsistency \| consumer naivete \| Konsumentenverhalten \| Consumer behaviour \| Zeitkonsistenz \| Time consistency \| Theorie \| Theory \| Intertemporale Entscheidung \| Intertemporal choice

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Extent:	1 Online-Ressource (circa 7 Seiten)
Series:	Discussion paper. - München : Collaborative Research Center Transregio 190, ZDB-ID 2881680-8. - Vol. no. 109 (August 2, 2018)
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Graue Literatur ; Non-commercial literature ; Arbeitspapier ; Working Paper
Language:	English
Other identifiers:	hdl:10419/185779 [Handle]
Classification:	d04 ; D18 - Consumer Protection ; D21 - Firm Behavior ; D40 - Market Structure and Pricing. General ; D90 - Intertemporal Choice and Growth. General ; L51 - Economics of Regulation
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10011905152