Working papers:
Nonlinear pricing with self-control preferences
Susanna Esteban; Eiichi Miyagawa; Matthew Shum
Downloads:
- Title:
- Nonlinear pricing with self-control preferences
- Author(s):
-
Esteban, Susanna
Miyagawa, Eiichi
Shum, Matthew - Date:
- 2003
- Type:
- Working papers
- Department:
- Economics
- Permanent URL:
- http://hdl.handle.net/10022/AC:P:500
- Series:
- Department of Economics Discussion Papers
- Part Number:
- 0304-03
- Publisher:
- Department of Economics, Columbia University
- Publisher Location:
- New York
- Abstract:
- This paper studies optimal nonlinear pricing for a monopolist when consumers' preferences exhibit temptation and self-control as in Gul and Pesendorfer (2001a). Consumers are subject to temptation inside the store but exercise self-control, and those foreseeing large self-control costs do not enter the store. Consumers differ in their preferences under temptation. When all consumers are tempted by more expensive, higher quality choices, the optimal menu is a singleton, which saves consumers from self-control and extracts consumers' commitment surplus. When some consumers are tempted by cheaper, lower quality choices, the optimal menu may contain a continuum of choices.
- Subject(s):
- Economics, Commerce-Business
- Item views:
- 118