Economists typically assume that demand curves are downward sloping. We present evidence that increasing the price of an item from $44 to $49 may increase unit demand by up to 30%. This effect is substantial, has broad application, is easily replicated, and contradicts the downward-sloping...

Current neoclassical microeconomic theory of rational consumer behavior affirms a unique consumer price-quantity relationship under conditions associated with monopolistic competition. Inverse demand will be just as own-price elastic as demand in the neighborhood of the limit state, while demand...

In this paper we explore the underlying consumer heterogeneity in competitive markets for subscription-based IT services that exhibit network effects. Insights into consumer heterogeneity with respect to a given service are paramount in forecasting future subscriptions, understanding the impact...

Preference consistency implies that people have learned their willingness to trade off attributes. We argue that this is not necessarily the case. Instead, we show that when preferences are learned in context (e.g., through repeated choices made from a trinary choice set that includes an...

This paper shows how sustainable consumption patterns can spread within a population via processes of social learning even though a strong individual learning bias may favor environmentally harmful products. We present a model depicting how the biased transmission of different behaviors via...

A characteristic feature of economic development is the ever changing structure of consumption patterns. Reducing the explanation of this phenomenon to changing prices, finally caused by changes in the availability of goods (or characteristics), would neglect a major force driving this change,...

This paper builds a consumer search model where the cost of going back to stores already searched is explicitly taken into account. We show that the optimal search rule under costly recall is very different from the optimal search rule under perfect recall. Under costly recall, the optimal...

Behavioral (e.g. consumption) patterns of boundedly rational agents can lead these agents into learning dynamics that appear to be wasteful in terms of well-being or welfare. Within settings displaying preference endogeneity, it is however still unclear how to conceptualize well-being. This...

The purpose of this article is to encourage research on the aspects of consumer behaviour, particularly as found in groups of consumers. For both researchers and practitioners, consumer knowledge is a critical factor in creating competitive success over time. But there is a gap in the knowledge...

Limits on consumer attention give firms incentives to manipulate prospective buyers’ allocation of attention. This paper models such attention manipulation and shows that it limits the ability of disclosure regulation to improve consumer welfare. Competitive information supply, from firms...