Reference Distorted Prices

Jozsef Sakovics

doi:10.1007/s11129-011-9104-5

Reference Distorted Prices

Jozsef Sakovics

School of Economics

Research output: Contribution to journal › Article › peer-review

Abstract

I show that when consumers (mis) perceive prices relative to reference prices, budgets turn out to be soft, prices tend to be lower and the average quality of goods sold decreases. These observations provide explanations for decentralized purchase decisions, for people being happy with a purchase even when they have paid their "valuation", and for why trade might affect high quality local firms "unfairly".

Original language	English
Pages (from-to)	339-363
Number of pages	25
Journal	Quantitative Marketing and Economics
Volume	9
Issue number	4
DOIs	https://doi.org/10.1007/s11129-011-9104-5
Publication status	Published - Dec 2011

Keywords

Reference price
Soft budget constraint
Transaction contraint
Transaction utility
Leftover utility
D11

Access to Document

10.1007/s11129-011-9104-5

Reference distorted prices
© Sakovics, J. (2011). Reference distorted prices. Quantitative Marketing and Economics, 9(4), 339-363, http://dx/doi.org/10.1007/s11129-011-9104-5 The final publication is available at link.springer.com
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http://download.springer.com/static/pdf/183/art%253A10.1007%252Fs11129-011-9104-5.pdf?auth66=1394292571_67f537ffff3a9fbf7efe7fac78e79191&ext=.pdf

Cite this

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