Durable Goods Adoption and the Consumer Discount Factor: A Case Study of the Norwegian Book Market

Øystein Daljord ()
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Øystein Daljord: Booth School of Business, University of Chicago, Chicago, Illinois 60637

Management Science, 2022, vol. 68, issue 9, 6783-6796

Abstract: We exploit a change in Norway’s fixed book pricing policies to construct exclusion restrictions with which to identify consumers’ discount factor. We assume that the policy change generated an unanticipated, exogenous shock to consumers’ expectations about future price cuts. Our findings suggest that consumers are much more impatient than would be implied by the real rate of interest, challenging the standard assumed rate of discounting in the extant literature on dynamic demand estimation. The high rate of consumer impatience is consistent with laboratory studies in the behavioral economics and decision-making literatures.

Keywords: forward-looking behavior; discounting; demand estimation; vertical price restraints (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:68:y:2022:i:9:p:6783-6796

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