Cognitive Dissonance and Customer Allegiance in a Mixed Oligopoly

Lampros Lamprinakis and Murray E. Fulton

No 21228, 2006 Annual meeting, July 23-26, Long Beach, CA from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: The purpose of this article is to examine the effect of cognitive dissonance in a mixed oligopoly where a local cooperative competes with an investor-owned firm (IOF) for the local market. The article explicitly incorporates individuals' beliefs regarding the quality of the two organizations as a choice variable in the utility function and individuals trade off utility from beliefs against utility resulting from their actions. The proposed model considers a case where managerial decisions or the introduction of new products forces consumers to modify their initial beliefs regarding the (superior) quality of their cooperative. Analytical results demonstrate the changes in equilibrium that result from cognitive dissonance.

Keywords: Consumer/Household; Economics (search for similar items in EconPapers)
Pages: 24
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea06:21228

DOI: 10.22004/ag.econ.21228

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