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Altruistic Dynamic Pricing with Customer Regret

Rotemberg, Julio J. - 2009

A model is considered where firms internalize the regret costs that consumers experience when they see an unexpected price change. Regret costs are assumed to be increasing in the size of price changes and this can explain why the size of price increases is less sensitive to inflation than in...

Persistent link: https://www.econbiz.de/10012463715

Behavioral Aspects of Price Setting, and Their Policy Implications

Rotemberg, Julio J. - 2008

This paper starts by discussing consumers' cognitive and emotional reaction to posted prices. Cognitively, some consumers do not appear to make effective use of price information to maximize their consumption-based utility. Emotionally, prices can induce regret and anger among consumers. The...

Persistent link: https://www.econbiz.de/10012464893

Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets

Gabaix, Xavier - 2005

Bayesian consumers infer that hidden add-on prices (e.g. the cost of ink for a printer) are likely to be high prices. If consumers are Bayesian, firms will not shroud information in equilibrium. However, shrouding may occur in an economy with some myopic (or unaware) consumers. Such shrouding...

Persistent link: https://www.econbiz.de/10012466916

Fair Pricing

Rotemberg, Julio J. - 2004

I suppose that consumers see a firm as fair if they cannot reject the hypothesis that the firm is somewhat benevolent towards them. Consumers that can reject this hypothesis become angry, which is costly to the firm. I show that firms that wish to avoid this anger will keep their prices rigid...

Persistent link: https://www.econbiz.de/10012467772

Consumer Information and Price Discrimination : Does the Internet Affect the Pricing of New Cars to Women and Minorities?

Morton, Fiona Scott - 2001

Mediating transactions through the Internet removes important cues that salespeople can use to assess a consumer's willingness to pay. We analyze whether dealers' difficulty in identifying consumer characteristics on the Internet and consumers' ease in finding information affects equilibrium...

Persistent link: https://www.econbiz.de/10012470047

Pricing when Customers Care about Fairness but Misinfer Markups

Eyster, Erik - 2017

This paper proposes a theory of price rigidity consistent with survey evidence that firms stabilize prices out of … fairness to their consumers. The theory relies on two psychological assumptions. First, customers care about the fairness of … rigid. Embedded in a simple macroeconomic model, our pricing theory produces nonneutral monetary policy, a short …

Persistent link: https://www.econbiz.de/10012453933

Relative Price Dispersion : Evidence and Theory

Kaplan, Greg - 2016

items from different stores. We calibrate our theory and show that it is not only consistent with the extent and sources of …

Persistent link: https://www.econbiz.de/10012456741

Best Prices : Price Discrimination and Consumer Substitution

Chevalier, Judith A. - 2014

We propose a method for aggregating prices when retailers use periodic sales to price-discriminate amongst heterogeneous customers. To do so, we introduce a model in which Loyal customers buy one brand and do not strategically time purchases, while Bargain Hunters always pay the lowest price...

Persistent link: https://www.econbiz.de/10012457898

Empirical Models of Demand and Supply in Differentiated Products Industries

Gandhi, Amit; Nevo, Aviv - National Bureau of Economic Research - 2021

This is an invited chapter for the forthcoming Volume 4 of the Handbook of Industrial Organization. We present empirical models of demand and supply in differentiated products industries with an emphasis on the key ideas arising from the recent applied literature. We start with a discussion of...

Persistent link: https://www.econbiz.de/10012629477

Barbarians at the Store? Private Equity, Products, and Consumers

Fracassi, Cesare - 2020

We investigate the effects of private equity on product markets using price and sales data for an extensive number of consumer products. Following a buyout, target firms increase sales 50% more than matched control firms. Price increases--roughly 1% on existing products--do not drive this...

Persistent link: https://www.econbiz.de/10012481630

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