More documents from Wenner, Lukas

Export to your Reference Manger

Please Copy & Paste



Bookmark and Share

Expected prices as reference points: theory and experiments

[working paper]

Wenner, Lukas

fulltextDownloadDownload full text

(external source)

Citation Suggestion

Please use the following Persistent Identifier (PID) to cite this document:

Further Details
Corporate Editor Wissenschaftszentrum Berlin für Sozialforschung gGmbH
Abstract I show theoretically that applying the model of Köszegi and Rabin (2006) to a simple purchasing decision where consumers are exante uncertain about the price realisation, gives -when changing the underlying distribution of expected prices- rise to counterintuitive predictions in contrast with a "good deal model" where consumers are predicted to be disappointed (rejoice) when the realised price is perceived as being worse (better) than the other possible realisation. While the underlying ideas of both models are similar with respect to expectation-based reference points, the different results come from the concept of Personal Equilibrium in Köszegi and Rabin (2006). The experimental results show some support for the simpler good deal model for a number of different real consumption goods though the support is weaker for goods that either have a salient market price or no market price outside of the experiment. (author's abstract)
Keywords consumer; buying behavior; expectation; price; experiment; market price
Classification Sociology of Economics; Marketing
Document language English
Publication Year 2014
City Berlin
Page/Pages 41 p.
Series Discussion Papers / Wissenschaftszentrum Berlin für Sozialforschung, Forschungsschwerpunkt Markt und Entscheidung, Abteilung Ökonomik des Wandels, SP II 2014-306
Status Published Version; reviewed
Licence Deposit Licence - No Redistribution, No Modifications