Reference distorted prices
AbstractI show that when consumers (mis)perceive prices relative to reference prices, budgets turn out to be soft, prices tend to be lower and the average quality of goods sold decreases. These observations provide explanations for decentralized purchase decisions, for people being happy with a purchase even when they have paid their valuation, and for why trade might aÂ¤ect high quality local firms unfairly.
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Bibliographic InfoArticle provided by Springer in its journal Quantitative Marketing and Economics.
Volume (Year): 9 (2011)
Issue (Month): 4 (December)
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Web page: http://www.springerlink.com/link.asp?id=111240
Reference price; Soft budget constraint; Transaction utility; Leftover utility; D11;
Other versions of this item:
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
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