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

  • Judith Chevalier

    (Yale School of Management and NBER.)

  • Austan Goolsbee

    (University of Chicago Booth School of Business.)

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. (c) 2009 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology..

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Article provided by MIT Press in its journal Quarterly Journal of Economics.

Volume (Year): 124 (2009)
Issue (Month): 4 (November)
Pages: 1853-1884

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Handle: RePEc:tpr:qjecon:v:124:y:2009:i:4:p:1853-1884
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