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Bait and Switch

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  • Lazear, Edward P

Abstract

Sellers sometimes practice a form of false advertising known as bait and switch. A low-priced good is advertised but replaced by a different good at the showroom. The practice is surprising since advertising the wrong good discourages the appropriate buyers from shopping, attracting customers who will be disappointed when they see the good. Firms bait and switch to draw a greater number of shoppers. The cost is that some who would have bought the good that is for sale may not bother to look. Under a variety of conditions, bait and switch is a profitable strategy resulting in a fully rational equilibrium with false advertising. Copyright 1995 by University of Chicago Press.

Suggested Citation

  • Lazear, Edward P, 1995. "Bait and Switch," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 813-830, August.
  • Handle: RePEc:ucp:jpolec:v:103:y:1995:i:4:p:813-30
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    Cited by:

    1. John Ashton & Andros Gregoriou, 2014. "The role of implicit costs and product quality in determining the customer costs of using personal current accounts," Working Papers 14001, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
    2. Antonio Rosato, 2016. "Selling substitute goods to loss-averse consumers: limited availability, bargains, and rip-offs," RAND Journal of Economics, RAND Corporation, vol. 47(3), pages 709-733, August.
    3. Glenn Ellison, 2005. "A Model of Add-On Pricing," The Quarterly Journal of Economics, Oxford University Press, vol. 120(2), pages 585-637.
    4. Luís Cabral, 2012. "Lock in and switch: Asymmetric information and new product diffusion," Quantitative Marketing and Economics (QME), Springer, vol. 10(3), pages 375-392, September.
    5. Sandro Ambuehl, 2017. "An Offer You Can't Refuse? Incentives Change How We Inform Ourselves and What We Believe," CESifo Working Paper Series 6296, CESifo Group Munich.
    6. Xavier Gabaix & David Laibson, 2006. "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets," The Quarterly Journal of Economics, Oxford University Press, vol. 121(2), pages 505-540.
    7. Morley Gunderson, 2010. "Edward P. Lazear," Chapters,in: The Elgar Companion to the Chicago School of Economics, chapter 8 Edward Elgar Publishing.

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