Contracts with Framing

Yuval Salant and Ron Siegel

American Economic Journal: Microeconomics, 2018, vol. 10, issue 3, 315-46

Abstract: 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.

JEL-codes: D11 D82 D86 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/mic.20160230
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/mic.20160230 (application/pdf)
https://www.aeaweb.org/articles/attachments?retrie ... 88-IRst22Y3b_dkNHdtg (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aejmic:v:10:y:2018:i:3:p:315-46

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Journal: Microeconomics is currently edited by Johannes Hörner

More articles in American Economic Journal: Microeconomics from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().