Loss aversion, price and quality
AbstractThe Spence model (1975) is extended so that customersÃ¢â¬â¢ utility depends on their disposition to the firm in addition to quantity and quality of the good consumed. Disposition is determined by customersÃ¢â¬â¢ perception of firmÃ¢â¬â¢s pricing and quality decisions, which perception is Ã¢â¬Ëreference dependentÃ¢â¬â¢. The profit maximising and efficient price and quality combinations are derived. Adjustment to a change in economic conditions may call for price rigidity, quality rigidity or both depending on the level of the reference price and quality
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics).
Volume (Year): 36 (2007)
Issue (Month): 5 (October)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/620175
Other versions of this item:
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
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.:
- Dennis W. Carlton, 1987.
"The Theory and the Facts of How Markets Clear: Is Industrial Organization Valuable for Understanding Macroeconomics?,"
NBER Working Papers
2178, National Bureau of Economic Research, Inc.
- Carlton, Dennis W., 1989. "The theory and the facts of how markets clear: Is industrial organization valuable for understanding macroeconomics?," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 15, pages 909-946 Elsevier.
- Dennis W. Carlton, 1986. "The Theory and the Facts of How Markets Clear: Is Industrial Organization Valuable for Understanding Macroeconomics?," University of Chicago - George G. Stigler Center for Study of Economy and State 44, Chicago - Center for Study of Economy and State.
- Spence, Michael, 1976. "Product Differentiation and Welfare," American Economic Review, American Economic Association, vol. 66(2), pages 407-14, May.
- Heidhues, Paul & Köszegi, Botond, 2005.
"The Impact of Consumer Loss Aversion on Pricing,"
CEPR Discussion Papers
4849, C.E.P.R. Discussion Papers.
- Rotemberg, Julio J., 2005. "Customer anger at price increases, changes in the frequency of price adjustment and monetary policy," Journal of Monetary Economics, Elsevier, vol. 52(4), pages 829-852, May.
- Sibly, Hugh, 2002. "Loss averse customers and price inflexibility," Journal of Economic Psychology, Elsevier, vol. 23(4), pages 521-538, August.
- Dixit, Avinash K & Stiglitz, Joseph E, 1977.
"Monopolistic Competition and Optimum Product Diversity,"
American Economic Review,
American Economic Association, vol. 67(3), pages 297-308, June.
- Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
- Rosenkranz, Stephanie & Schmitz, Patrick W., 2004.
"Reserve Prices in Auctions as Reference Points,"
CEPR Discussion Papers
4264, C.E.P.R. Discussion Papers.
- Stephanie Rosenkranz & Patrick W. Schmitz, 2005. "Reserve prices in auctions as reference points," Bonn Econ Discussion Papers bgse24_2005, University of Bonn, Germany.
- Stephanie Rosenkranz & Patrick W. Schmit, 2005. "Reserve prices in auctions as reference points," Working Papers 05-14, Utrecht School of Economics.
- A. Michael Spence, 1975. "Monopoly, Quality, and Regulation," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 417-429, Autumn.
- Schmalensee, Richard, 1979. "Market Structure, Durability, and Quality: A Selective Survey," Economic Inquiry, Western Economic Association International, vol. 17(2), pages 177-96, April.
- S. Rosenkranz, 2003.
"The Manufacturer's Suggested Retail Price,"
03-05, Utrecht School of Economics.
- Ernst Fehr & Simon Gaechter, 2000.
"Fairness and Retaliation: The Economics of Reciprocity,"
CESifo Working Paper Series
336, CESifo Group Munich.
- Ernst Fehr & Simon G�chter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 159-181, Summer.
- Ernst Fehr & Simon Gaechter, . "Fairness and Retaliation: The Economics of Reciprocitys," IEW - Working Papers 040, Institute for Empirical Research in Economics - University of Zurich.
- Daniel Kahneman & Jack L. Knetsch & Richard H. Thaler, 1991. "Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 193-206, Winter.
- Tversky, Amos & Kahneman, Daniel, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1039-61, November.
- Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-41, September.
- Swan, Peter L, 1970. "Durability of Consumption Goods," American Economic Review, American Economic Association, vol. 60(5), pages 884-94, December.
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
- Tversky, Amos & Kahneman, Daniel, 1986. "Rational Choice and the Framing of Decisions," The Journal of Business, University of Chicago Press, vol. 59(4), pages S251-78, October.
- Pirschel, Inske & Ahrens, Steffen & Snower, Dennis, 2013. "A Theory of Price Adjustment under Loss Aversion," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79793, Verein für Socialpolitik / German Economic Association.
- Steffen Ahrens & Matthias Hartmann, 2014. "State-dependence vs. Time-dependence: An Empirical Multi-Country Investigation of Price Sluggishness," Kiel Working Papers 1907, Kiel Institute for the World Economy.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If references are entirely missing, you can add them using this form.