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Quality Provision, Expected Firm Altruism and Brand Extensions

Rotemberg, Julio J. - 2010

the demand for a brand's existing products even if the quality of these existing products is well understood by consumers …. The model provides an interpretation for the dependence of the success of brand extensions on the ``fit" between the … original product and the extension. The model can also explain why a ``high-end" brand that is expected to care only for its …

Persistent link: https://www.econbiz.de/10013149303

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/10013160156

Behavioral Aspects of Price Setting, and Their Policy Implications

Rotemberg, Julio J. - 2010

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/10012759576

Fair Pricing

Rotemberg, Julio J. - 2021

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/10013230827

Customer Anger at Price Increases, Time Variation in the Frequency of Price Changes and Monetary Policy

Rotemberg, Julio J. - 2021

While much evidence suggests tha price rigidity is due to a concern with the reaction of customers, price increases do not seem to be typically associated with drastic reduction in purchases. To explain this apparent inconsistency, this paper develops a model where consumers care about the...

Persistent link: https://www.econbiz.de/10013310540

Persuasion and Empathy in Salesperson-Customer Interactions

Rotemberg, Julio J. - 2010

In a search model, prospects encounter salespeople who can try to persuade them. Persuasive messages can increase the utility of buying or increase the cost of not buying. The latter reduces welfare. Equilibria where only some salespeople make a persuasive effort often exist. Salespeople vary in...

Persistent link: https://www.econbiz.de/10013143761