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Are Durable Goods Consumers Forward-Looking? Evidence from College Textbooks

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  • Judith Chevalier
  • Austan Goolsbee

Abstract

We test whether textbook consumers are forward-looking, using a large new data set on textbooks sold in college bookstores during the ten semesters from 1997 to 2001. The data strongly support the hypothesis that students are forward-looking with low short-run discount rates and that they behave as if they have rational expectations of publishers' revision behavior. Data from a second new data set on the market prices of used books at Amazon Marketplace also support the hypothesis of rational, forward-looking behavior. Simulation results indicate that students are sufficiently forward-looking that publishers cannot consistently raise revenue by accelerating current revision cycles.

Suggested Citation

  • Judith Chevalier & Austan Goolsbee, 2009. "Are Durable Goods Consumers Forward-Looking? Evidence from College Textbooks," The Quarterly Journal of Economics, Oxford University Press, vol. 124(4), pages 1853-1884.
  • Handle: RePEc:oup:qjecon:v:124:y:2009:i:4:p:1853-1884.
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    File URL: http://hdl.handle.net/10.1162/qjec.2009.124.4.1853
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    Cited by:

    1. Ali K. Parlaktürk, 2012. "The Value of Product Variety When Selling to Strategic Consumers," Manufacturing & Service Operations Management, INFORMS, pages 371-385.
    2. Xing Li & Megan MacGarvie & Petra Moser, 2014. "Dead Poets’ Property - How Does Copyright Influence Price," Discussion Papers 14-001, Stanford Institute for Economic Policy Research.
    3. Guofang Huang & Ahmed Khwaja & K. Sudhir, 2012. "Short Run Needs and Long Term Goals: A Dynamic Model of Thirst Management," Cowles Foundation Discussion Papers 1856, Cowles Foundation for Research in Economics, Yale University.
    4. Blonigen, Bruce A. & Knittel, Christopher R. & Soderbery, Anson, 2017. "Keeping it fresh: Strategic product redesigns and welfare," International Journal of Industrial Organization, Elsevier, pages 170-214.
    5. Février, Philippe & Wilner, Lionel, 2016. "Do consumers correctly expect price reductions? Testing dynamic behavior," International Journal of Industrial Organization, Elsevier, pages 25-40.
    6. Minkyung Kim & K. Sudhir & Kosuke Uetake & Rodrigo Canales, 2016. "Multidimensional Sales Incentives in CRM Settings: Customer Adverse Selection and Moral Hazard," Cowles Foundation Discussion Papers 2085, Cowles Foundation for Research in Economics, Yale University.
    7. Benjamin Shiller, 2013. "Digital distribution and the prohibition of resale markets for information goods," Quantitative Marketing and Economics (QME), Springer, vol. 11(4), pages 403-435, December.
    8. Umit G. Gurun & Gregor Matvos & Amit Seru, 2016. "Advertising Expensive Mortgages," Journal of Finance, American Finance Association, vol. 71(5), pages 2371-2416, October.
    9. Aviv Nevo & John L. Turner & Jonathan W. Williams, 2016. "Usage‐Based Pricing and Demand for Residential Broadband," Econometrica, Econometric Society, vol. 84, pages 411-443, March.
    10. Andrew T. Ching & Tülin Erdem & Michael P. Keane, 2013. "Learning Models: An Assessment of Progress, Challenges and New Developments," Economics Papers 2013-W07, Economics Group, Nuffield College, University of Oxford.
    11. Phillip Leslie & Alan Sorensen, 2009. "The Welfare Effects of Ticket Resale," NBER Working Papers 15476, National Bureau of Economic Research, Inc.
    12. Ben Shiller, 2016. "Personalized Price Discrimination Using Big Data," Working Papers 108, Brandeis University, Department of Economics and International Businesss School.
    13. Harikesh Nair, 2007. "Intertemporal price discrimination with forward-looking consumers: Application to the US market for console video-games," Quantitative Marketing and Economics (QME), Springer, vol. 5(3), pages 239-292, September.
    14. Adam J. Mersereau & Dan Zhang, 2012. "Markdown Pricing with Unknown Fraction of Strategic Customers," Manufacturing & Service Operations Management, INFORMS, pages 355-370.
    15. Shuya Yin & Saibal Ray & Haresh Gurnani & Animesh Animesh, 2010. "Durable Products with Multiple Used Goods Markets: Product Upgrade and Retail Pricing Implications," Marketing Science, INFORMS, vol. 29(3), pages 540-560, 05-06.
    16. Steffen Altmann & Armin Falk & Matthias Wibral, 2012. "Promotions and Incentives: The Case of Multistage Elimination Tournaments," Journal of Labor Economics, University of Chicago Press, vol. 30(1), pages 149-174.
    17. Voraprapa Nakavachara & Kanis Saengchote, 2017. "Are Consumers Forward-looking? Evidence from Used iPhones," PIER Discussion Papers 66, Puey Ungphakorn Institute for Economic Research, revised Aug 2017.
    18. Robert Swinney, 2011. "Selling to Strategic Consumers When Product Value Is Uncertain: The Value of Matching Supply and Demand," Management Science, INFORMS, pages 1737-1751.
    19. Samuel P. Fraiberger & Arun Sundararajan, 2015. "Peer-to-Peer Rental Markets in the Sharing Economy," Working Papers 15-19, NET Institute.
    20. D. Pennesi, 2016. "Intertemporal discrete choice," Working Papers wp1061, Dipartimento Scienze Economiche, Universita' di Bologna.
    21. Depetris-Chauvin, Emilio, 2015. "Fear of Obama: An empirical study of the demand for guns and the U.S. 2008 presidential election," Journal of Public Economics, Elsevier, pages 66-79.

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