Packaging of Sin Goods - Commitment or Exploitation?
AbstractI consider the shopping and consumption decision of an individual with a self-control problem. The consumer believes that restricting the consumption of a sinful product (such as chips) is in his long-run interest. But when facing the actual decision he is tempted to overeat. I ask how fims react to such self-control problems, and possibly exploit them, by offering different package sizes. In a competitive market, either one or three (small, medium and large) packages are offered. In contrast to common intuition, the large, and not the small package is a commitment device. The latter serves to exploit the naive consumer.
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Bibliographic InfoPaper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 2014-05.
Date of creation: 23 Jan 2014
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Quasi-hyperbolic discounting; self-control; consumer behavior; non-linear pricing;
Find related papers by JEL classification:
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D49 - Microeconomics - - Market Structure and Pricing - - - Other
- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-02-02 (All new papers)
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