Buy It Now or Later, or Not: Loss Aversion in Advance Purchasing
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arXiv
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| Format: | Preprint |
| Published: |
2021
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| _version_ | 1866913346876342272 |
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| author | Lin, Senran |
| author_facet | Lin, Senran |
| contents | This paper studies the advance-purchase game when a consumer has belief-based loss-averse preferences, introducing a novel perspective by incorporating reference updating. It demonstrates that loss aversion increases the consumer's willingness to pre-purchase. Moreover, the paper endogenizes the seller's price-commitment behavior in the advance-purchase problem. The analysis reveals that the seller will commit to his spot price even with no obligation to do so, a behavior previously assumed in the literature. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2110_14929 |
| institution | arXiv |
| publishDate | 2021 |
| record_format | arxiv |
| spellingShingle | Buy It Now or Later, or Not: Loss Aversion in Advance Purchasing Lin, Senran Theoretical Economics This paper studies the advance-purchase game when a consumer has belief-based loss-averse preferences, introducing a novel perspective by incorporating reference updating. It demonstrates that loss aversion increases the consumer's willingness to pre-purchase. Moreover, the paper endogenizes the seller's price-commitment behavior in the advance-purchase problem. The analysis reveals that the seller will commit to his spot price even with no obligation to do so, a behavior previously assumed in the literature. |
| title | Buy It Now or Later, or Not: Loss Aversion in Advance Purchasing |
| topic | Theoretical Economics |
| url | https://arxiv.org/abs/2110.14929 |