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

Senran Lin

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arXiv · 2110.14929

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

Senran Lin

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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.

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Senran Lin. 2021-10-28. Buy It Now or Later, or Not: Loss Aversion in Advance Purchasing. https://arxiv.org/abs/2110.14929

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