Packaging of Sin Goods - Commitment or Exploitation?
I 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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