 The impact of consumer’s regret on firms’ decisions in a durable good marketJournal of Economics, 2023, vol. 139, issue 2, No 2, 125-157 Abstract: Abstract This paper studies how the consumer’s anticipated regret affects the firms’ pricing decisions and profits in a duopoly market. I consider a two-period game with differentiated durable products, where an incumbent sells a basic version over two periods, and an entrant releases an improved version in period 2, of which the improved features are difficult to assess by the consumers. This ambiguity will lead to regret. This paper focuses on two types of regret: a consumer may regret purchasing in period 1 instead of purchasing in period 2 (action regret); a consumer who waited until period 2 might regret not buying in period 1 (inaction regret). The consumers can anticipate the possible regret, which will influence the consumer’s decision-making. The results show that both types of anticipated regret may increase or decrease the incumbent’s profit. In contrast, action (inaction) regret always benefits (harms) the entrant. Besides, the analysis indicates that the improved version’s quality may either strengthen or weaken the impact of regret. Moreover, this paper examines the robustness of the results under different setups. Keywords: Consumers’ anticipated regret; Uncertainty; Duopoly competition; Durable good (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:139:y:2023:i:2:d:10.1007_s00712-023-00819-w DOI: 10.1007/s00712-023-00819-w Access Statistics for this article Journal of Economics is currently edited by Giacomo Corneo More articles in Journal of Economics from Springer |
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