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Packaging of sin goods - Commitment or exploitation?

Author

Listed:
  • Christensen, Else Gry Bro
  • Nafziger, Julia

Abstract

We 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. We ask how firms react to such self-control problems, and possibly exploit them, by offering different package sizes. In a competitive market, either one or three package sizes are offered. In contrast to common intuition, the large, and not the small package might be a commitment device. The latter may serve to exploit the naive consumer. (C) 2015 Elsevier B.V. All rights reserved.

Suggested Citation

  • Christensen, Else Gry Bro & Nafziger, Julia, 2016. "Packaging of sin goods - Commitment or exploitation?," Munich Reprints in Economics 43476, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:43476
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    Cited by:

    1. Michael Grubb, 2015. "Behavioral Consumers in Industrial Organization: An Overview," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 47(3), pages 247-258, November.
    2. Michael D. Grubb, 2015. "Behavioral Consumers in Industrial Organization," Boston College Working Papers in Economics 879, Boston College Department of Economics.
    3. Gross, Jeremie & Guirkinger, Catherine & Platteau, Jean-Philippe, 2020. "Buy as you need: Nutrition and food storage imperfections," Journal of Development Economics, Elsevier, vol. 144(C).
    4. Murooka, Takeshi & Schwarz, Marco A., 2019. "Consumer exploitation and notice periods," Economics Letters, Elsevier, vol. 174(C), pages 89-92.
    5. Matteo Foschi, 2016. "Temptation in Markets with no Commitment: Give-aways, Scare-aways and Reversals," Discussion Papers in Economics 16/12, Division of Economics, School of Business, University of Leicester.

    More about this item

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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