Consumer loss aversion and scale-dependent psychological switching costs

卷:138

Article

关键词: PROSPECT-THEORY;    SEARCH;    CHOICE;    EXPECTATIONS;    DISAPPOINTMENT;    COMPETITION;    PRODUCTS;    MODEL;    TOO;    PREFERENCES;   

DOI  :  10.1016/j.geb.2023.01.001

来源: SCIE

【 摘 要 】

We consider a model of product differentiation where consumers are uncertain about the qualities and prices of firms' products. They can inspect all products at zero cost. A share of consumers is expectation-based loss averse. For these consumers, buying products of varying quality and price creates disutility from gain-loss sensations. Even at modest degrees of loss aversion they may refrain from inspecting all products and choose an individual default that is strictly dominated in terms of surplus. Firms' strategic behavior exacerbates the scope for this effect. The model generates scale-dependent psychological switching costs that increase in the value of the transaction. They imply that making switching easier or costless for consumers would not motivate more switching.(c) 2023 The Author(s). Published by Elsevier Inc. This is an open access article under the CC BY license (http://creativecommons .org /licenses /by /4 .0/).

【 授权许可】

Free