This paper investigates situations where a sizeable sub-set of consumers prefer an inferior (dominated) offer made by an established brand to a superior (dominating) offer made by a less-established brand. Established brands are those for which consumers hold more confident beliefs concerning...

Superfluous choices are unnecessary choice steps that could be removed without affecting the final choice context and outcome. They are introduced in this article in order to study the mere effects of consumer participation. Superfluous choices have no immediate impact on the chosen option but...

We analyze the marketing strategies of vertically differentiated firms when consumers observe their performance on corporate social responsibility (CSR) and firms simultaneously decide the price, advertising intensity and the investment in CSR. While advertising increases consumers’ perception...

This paper is concerned with the tension between consumer persuasion and freedom of choice. We study how assertive language (as in the slogan Just do it!) affects consumer compliance in hedonic vs. utilitarian contexts. Previous literature consistently claimed that forceful language would cause...

This paper analyzes a model of discounted utility under habit formation. Habit formation means that utility in each period is determined by the difference between the received outcome and the customary outcome at that point in time. Preferences are rational, in the sense that the decision maker...

This paper examines how consumers' willingness to pay for goods is determined by past patterns of consumption. The central result is a theorem of interior maximum, which states that willingness to pay for a good is maximized at a moderate level of habitual consumption. The theorem is derived...