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Behavioral Biases Meet the Market: The Case of Magazine Subscription Prices

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Author Info
Sharon Oster (Yale University)
Fiona Scott Morton (Yale University)
Abstract

Using data from American magazines, we explore the relationship between newsstand and subscription prices and magazine characteristics. In particular, we distinguish between magazines that provide benefits in the future (investment magazines) versus those that are simply fun to read now (leisure magazines). A consumer with a present bias at the newsstand discounts the future payoff of the investment good but fully values the leisure good. This difference does not exist for subscriptions. Thus, the ratio of the subscription to newsstand willingness to pay for a magazine should differ between investment and leisure goods. We find that for magazines whose payoff is in the future, subscriptions are relatively more costly, ceteris paribus. This finding suggests that publishers reflect the present bias preferences of consumers in their price setting behavior.

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File URL: http://www.bepress.com/cgi/viewcontent.cgi?article=1323&context=bejeap
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Publisher Info
Article provided by Berkeley Electronic Press in its journal Advances in Economic Analysis & Policy.

Volume (Year): 5 (2005)
Issue (Month): 1 ()
Pages: 1323-1323
Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Handle: RePEc:bep:eapadv:v:5:y:2005:i:1:p:1323-1323

Note: oai:bepress:bejeap-1323
Contact details of provider:
Web page: http://www.bepress.com/bejeap/advances/

Order Information:
Web: http://www.bepress.com/subscriptions.html

For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).

Related research
Keywords: time-inconsistency commitment magazines subscriptions

Find related papers by JEL classification:
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Andrew Caplin & John Leahy, 2000. "The Social Discount Rate," NBER Working Papers 7983, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Ulrich Kaiser, 2004. "An Estimated Model of the German Magazine Market," CIG Working Papers SP II 2004-07, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG). [Downloadable!]
  3. Dertouzos, James N & Trautman, William B, 1990. "Economic Effects of Media Concentration: Estimates from a Model of the Newspaper Firm," Journal of Industrial Economics, Blackwell Publishing, vol. 39(1), pages 1-14, September. [Downloadable!] (restricted)
  4. Kaiser, Ulrich & Wright, Julian, 2004. "Price Structure in Two-sided Markets : Evidence from the Magazine Industry?," ZEW Discussion Papers 04-80, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
    Other versions:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Drago, Francesco & Kadar, Dora, 2006. "Rebate or Bait? A Model of Regret and Time Inconsistency in Consumer Behaviour," CEPR Discussion Papers 5757, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  2. Katherine L. Milkman & Todd Rogers & Max H. Bazerman, 2007. "Highbrow Films Gather Dust: A Study of Dynamic Inconsistency and Online DVD Rentals," Working Papers 07-099, Harvard Business School, revised Apr 2008. [Downloadable!]
  3. Xavier Gabaix & David Laibson, 2005. "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets," NBER Working Papers 11755, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Young Han Lee & Ulrike Malmendier, 2007. "The Bidder's Curse," NBER Working Papers 13699, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Sumit Agarwal & John C. Driscoll & Xavier Gabaix & David Laibson, 2008. "Learning in the Credit Card Market," NBER Working Papers 13822, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. Sumit Agarwal & John C. Driscoll & Xavier Gabaix & David Laibson, 2007. "The Age of Reason: Financial Decisions Over the Lifecycle," NBER Working Papers 13191, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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