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The paper offers a proof that expected utility maximisation with logarithmic utility is a dominant preference in the biological selection process in the sense that a population following any other preference for decision-making under risk will, with a probability that approaches certainty,...
Persistent link: https://www.econbiz.de/10011541191
rationally (in the sense of rational choice theory) pursuing them. This leads to a certain skepticism towards the idealization of …
Persistent link: https://www.econbiz.de/10014315089
The timing of payment can enhance salience, making customers more price-responsive when paying before consumption rather than after. This study examines Indonesia’s nationwide switch to prepaid electricity metering, impacting over 40 million households. We find that prepaid metering users are...
Persistent link: https://www.econbiz.de/10015178416
Firms often discourage certain categories of individuals from buying their products, seemingly at odds with typical assumptions about profit maximization. This paper provides a potential rationale for such firm behavior: Consumers seek to signal that they have "desirable" ideological values to...
Persistent link: https://www.econbiz.de/10013285514
Mainstream logic supports the idea that platforms bring large benefits to firms, especially smaller ones, by opening up access to a broader set of consumers and making firms' products easier to find. However, this argument mostly applies to transaction platforms that match consumer preferences...
Persistent link: https://www.econbiz.de/10013285516
Museums have many different goals beyond efficiency such as social equity, financial revenue, attracting donors and gaining international, regional or local prestige. Various pricing schemes are being discussed with the aim of reaching these goals. The classical ones are entry prices and free...
Persistent link: https://www.econbiz.de/10003997593
We consider a simple two period model where consumers have different switching costs. Before the market opens, there was an incumbent who sold to all consumers. We identify the equilibrium both with Stackelberg and Bertrand competition and show how the presence of low switching cost consumers...
Persistent link: https://www.econbiz.de/10010234544
Recent developments in economic theory model intertemporal choice decisions as problems of restraining one’s natural …
Persistent link: https://www.econbiz.de/10010237286
A primary means of bureaucratic oversight is consumer complaints. Yet, this important control mechanism has received very little attention in the literature on corruption. I study a model of corruption with incomplete information in which consumers require a government service from officials who...
Persistent link: https://www.econbiz.de/10009764417
We study implications of habit formation for optimal taxation. First, we show that taxation problems with habit formation can be analyzed using dynamic programming techniques. Second, we derive optimal labor and savings wedges for habit formation preferences. We show that habit formation...
Persistent link: https://www.econbiz.de/10010229853