Buy It Now or Later, or Not: Loss Aversion in Advance Purchasing

Senran Lin

Papers from arXiv.org

Abstract: This paper studies the advance-purchase game when a consumer has belief-based loss-averse preferences, introducing a novel perspective by incorporating reference updating. It demonstrates that loss aversion increases the consumer's willingness to pre-purchase. Moreover, the paper endogenizes the seller's price-commitment behavior in the advance-purchase problem. The analysis reveals that the seller will commit to his spot price even with no obligation to do so, a behavior previously assumed in the literature.

Date: 2021-10, Revised 2024-05
New Economics Papers: this item is included in nep-com, nep-cwa, nep-mic and nep-upt
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2110.14929

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