Competition under consumer loss aversion

• 成果类型: Article
• 署名作者: Karle, Heiko; Peitz, Martin
• 署名单位: Swiss Federal Institutes of Technology Domain; ETH Zurich; University of Mannheim
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12040
• 发表日期: 2014
• 页码: 1-31
• 关键词: reference-dependent preferences; prospect-theory; disappointment; expectations; INFORMATION; DECISION

摘要

We address the effect of expectation-based consumer loss aversion on firm strategy in imperfect competition. Consumers are fully informed about match value and price at the moment of purchase. However, some consumers are initially uninformed about their tastes and form a reference point consisting of an expected match value and price distribution, whereas others are perfectly informed all the time. We show that if firms have symmetric costs, a larger share of informed consumers leads to a more competitive outcome. The reverse holds if cost asymmetry in duopoly is sufficiently large.