Gain or Pain: Does Consumer Activity Reflect Utility Maximisation?

Yoonhee Chang and Catherine Waddams Price ()
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Catherine Waddams Price: Centre for Competition Policy, University of East Anglia

No 08-15, Working Papers from Centre for Competition Policy, University of East Anglia

Abstract: Competition Authorities are introducing new informational remedies to help consumers search and switch more actively. Using a specially commissioned data set, and unique direct estimates of the gains, search and switching time which consumers anticipate, we examine the determinants of consumer activity in eight markets. We find that expected costs (and to some extent gains) do influence consumers as a utility maximising model would predict; but that their role is small, and other factors, particularly experience of switching in other markets, are also influential. We conclude that consumers’ confidence in their own estimates is crucial in encouraging market activity.

Keywords: consumer behaviour; search and switching; informational remedies (search for similar items in EconPapers)
JEL-codes: D12 D83 L51 L88 L98 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2008-02
New Economics Papers: this item is included in nep-mic, nep-mkt and nep-upt
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http://www.ccp.uea.ac.uk/publicfiles/workingpapers/CCP08-15.pdf (application/pdf)

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Working Paper: Gain or Pain: Does Consumer Activity Reflect Utility Maximisation? (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ccp:wpaper:wp08-15

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