Contracts with Framing

• 成果类型: Article
• 署名作者: Salant, Yuval; Siegel, Ron
• 署名单位: Northwestern University; Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.20160230
• 发表日期: 2018
• 页码: 315-346
• 关键词: Loss aversion; insurance; CHOICE; MODEL; preferences; overconfidence; INFORMATION; COMPETITION; agents; frames

摘要

We study a model of contracts in which a profit-maximizing seller uses framing to influence buyers' purchasing behavior. Framing temporarily affects how buyers evaluate different products, and buyers can renege on their purchases after the framing effect wears off. We characterize the optimal contracts with framing and their welfare properties in several settings. Framing that is not too strong reduces total welfare in regulated markets with homogenous buyers, but increases total welfare in markets with heterogenous buyers when the proportion of buyers with low willingness to pay is small.