Sellers often discriminate heterogeneous consumers with just a few products. This paper proposes an explanation for such coarse screening, based on consumer loss aversion. In our model, a seller offers a menu of bundles before a consumer learns his willingness to pay, and the consumer...

We study optimal price discrimination when a monopolist faces a continuum of consumers with reference-dependent preferences. A consumer's valuation for product quality consists of an intrinsic valuation affected by a private state signal (type), and a gain-loss valuation that depends on...

We propose a model of instrumental belief choice under loss aversion. When new information arrives, an agent is prompted to abandon her prior. However, potential posteriors may induce her to take actions that generate a lower utility in some states than actions induced by her prior. These losses...