Consumer exploitation and notice periods

Takeshi Murooka and Marco Schwarz

Economics Letters, 2019, vol. 174, issue C, 89-92

Abstract: Firms often set long notice periods when consumers cancel a contract, and sometimes do so even when the costs of changing or canceling the contract are small. We investigate a model in which a firm offers a contract to consumers who may procrastinate canceling it due to naive present-bias. We show that the firm may set a long notice period to exploit naive consumers.

Keywords: Notice periods; Procrastination; Present bias; Time inconsistency; Consumer naivete (search for similar items in EconPapers)
JEL-codes: D04 D18 D21 D40 D90 L51 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S016517651830449X
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Consumer Exploitation and Notice Periods (2018)
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:eee:ecolet:v:174:y:2019:i:c:p:89-92

DOI: 10.1016/j.econlet.2018.10.036

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().