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Durable-Goods Monopoly with Privately Known Impatience: A Theoretical and Experimental Study

Author

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  • Werner Güth
  • Sabine Kröger
  • Hans-Theo Normann

Abstract

We analyze a durable-goods monopoly selling a single unit of a good to a buyer whose value of the good is private information. The discount factors of the buyer and the seller may differ and are also privately known. We derive the closed-form solution of a two-period game and compare it to the behavior observed in experiments. The data are to a large extent consistent with the predictions. (JEL C90, L12, C73) Copyright 2004, Oxford University Press.

Suggested Citation

  • Werner Güth & Sabine Kröger & Hans-Theo Normann, 2004. "Durable-Goods Monopoly with Privately Known Impatience: A Theoretical and Experimental Study," Economic Inquiry, Western Economic Association International, vol. 42(3), pages 413-424, July.
    • Handle: RePEc:oup:ecinqu:v:42:y:2004:i:3:p:413-424
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    Citations

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    Cited by:

    1. van Damme, E.E.C. & Larouche, P. & Müller, W., 2006. "Abuse of a Dominant Position : Cases and Experiments," Discussion Paper 2006-020, Tilburg University, Tilburg Law and Economic Center.
    2. Vincent Mak & Amnon Rapoport & Eyran J. Gisches & Jiaojie Han, 2014. "Purchasing Scarce Products Under Dynamic Pricing: An Experimental Investigation," Manufacturing & Service Operations Management, INFORMS, vol. 16(3), pages 425-438, July.
    3. Bayer, Ralph-C., 2010. "Intertemporal price discrimination and competition," Journal of Economic Behavior & Organization, Elsevier, vol. 73(2), pages 273-293, February.
    4. Mohammed Al-Hitmi & Salman Ahmad & Atif Iqbal & Sanjeevikumar Padmanaban & Imtiaz Ashraf, 2018. "Selective Harmonic Elimination in a Wide Modulation Range Using Modified Newton–Raphson and Pattern Generation Methods for a Multilevel Inverter," Energies, MDPI, vol. 11(2), pages 1-16, February.
    5. Vincent Mak & Amnon Rapoport & Eyran J. Gisches, 2018. "Dynamic Pricing Decisions and Seller-Buyer Interactions under Capacity Constraints," Games, MDPI, vol. 9(1), pages 1-23, February.
    6. Jack Fanning & Andrew Kloosterman, 2022. "An experimental test of the Coase conjecture: Fairness in dynamic bargaining," RAND Journal of Economics, RAND Corporation, vol. 53(1), pages 138-165, March.
    7. Atasoy, Ayse Tugba & Harmsen-van Hout, Marjolein & Madlener, Reinhard, 2018. "Strategic Demand Response to Dynamic Pricing: A Lab Experiment for the Electricity Market," FCN Working Papers 5/2018, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Jan 2020.
    8. Dongkyu Chang & Duk Gyoo Kim & Wooyoung Lim, 2022. "Positive and Negative Selection in Bargaining: An Experiment," CESifo Working Paper Series 9908, CESifo.
    9. Song, Yanan & Zhao, Xiaobo, 2016. "Strategic customer behavior facing possible stockout: An experimental study," International Journal of Production Economics, Elsevier, vol. 180(C), pages 57-67.

    More about this item

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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