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.
|Date of creation:||23 Jan 2014|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.econ.au.dk/afn/|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- B. Douglas Bernheim & Jonathan Meer & Neva K. Novarro, 2012. "Do Consumers Exploit Precommitment Opportunities? Evidence from Natural Experiments Involving Liquor Consumption," NBER Working Papers 17762, National Bureau of Economic Research, Inc.
- Janet Currie & Stefano DellaVigna & Enrico Moretti & Vikram Pathania, 2010.
"The Effect of Fast Food Restaurants on Obesity and Weight Gain,"
American Economic Journal: Economic Policy,
American Economic Association, vol. 2(3), pages 32-63, August.
- Janet Currie & Stefano DellaVigna & Enrico Moretti & Vikram Pathania, 2009. "The Effect of Fast Food Restaurants on Obesity and Weight Gain," NBER Working Papers 14721, National Bureau of Economic Research, Inc.
- Matt Shum & S Esteban & E Miyagawa, 2003.
"Nonlinear Pricing with Self-Control Preferences,"
Economics Working Paper Archive
503, The Johns Hopkins University,Department of Economics.
- Malmendier, Ulrike M. & Della Vigna, Stefano, 2003.
"Contract Design and Self Control: Theory and Evidence,"
1801, Stanford University, Graduate School of Business.
- Stefano DellaVigna & Ulrike Malmendier, 2004. "Contract Design and Self-Control: Theory and Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 119(2), pages 353-402.
- Paul W. Dobson & Eitan Gerstner, 2010. "For a Few Cents More: Why Supersize Unhealthy Food?," Marketing Science, INFORMS, vol. 29(4), pages 770-778, 07-08.
- Kfir Eliaz & Ran Spiegler, 2004.
"Contracting with Diversely Naïve Agents,"
122247000000000530, UCLA Department of Economics.
- Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
- Ted O'Donoghue and Matthew Rabin ., 1997.
"Doing It Now or Later,"
Economics Working Papers
97-253, University of California at Berkeley.
- Ted O'Donoghue & Matthew Rabin, 1996. "Doing It Now or Later," Discussion Papers 1172, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- O'Donoghue, Ted & Rabin, Matthew, 1997. "Doing It Now or Later," Department of Economics, Working Paper Series qt7t44m5b0, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Eliaz, Kfir & Spiegler, Ran, 2008. "Consumer optimism and price discrimination," Theoretical Economics, Econometric Society, vol. 3(4), December.
- Paul Heidhues & Botond Koszegi, 2010. "Exploiting Naivete about Self-Control in the Credit Market," American Economic Review, American Economic Association, vol. 100(5), pages 2279-2303, December.
- Ned Augenblick & Muriel Niederle & Charles Sprenger, 2015. "Editor's Choice Working over Time: Dynamic Inconsistency in Real Effort Tasks," The Quarterly Journal of Economics, Oxford University Press, vol. 130(3), pages 1067-1115.
- Lee, Helen, 2012. "The role of local food availability in explaining obesity risk among young school-aged children," Social Science & Medicine, Elsevier, vol. 74(8), pages 1193-1203.
- John Beshears & James J. Choi & David Laibson & Brigitte Madrian, 2006. "Early Decisions: A Regulatory Framework," NBER Working Papers 11920, National Bureau of Economic Research, Inc.
- Klaus Wertenbroch, 1998. "Consumption Self-Control by Rationing Purchase Quantities of Virtue and Vice," Marketing Science, INFORMS, vol. 17(4), pages 317-337.
- David Laibson, 1997.
"Golden Eggs and Hyperbolic Discounting,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 112(2), pages 443-478.
- Daniel Gottlieb, 2008. "Competition over Time-Inconsistent Consumers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(4), pages 673-684, 08.
- Sanjay Jain, 2012. "Marketing of Vice Goods: A Strategic Analysis of the Package Size Decision," Marketing Science, INFORMS, vol. 31(1), pages 36-51, January.
- Esteban, Susanna & Miyagawa, Eiichi, 2006. "Temptation, self-control, and competitive nonlinear pricing," Economics Letters, Elsevier, vol. 90(3), pages 348-355, March.
When requesting a correction, please mention this item's handle: RePEc:aah:aarhec:2014-05. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.