We present an information good pricing model with persistently heterogeneous consumers and a rising marginal propensity for them to pirate. Three offsetting pricing mechanisms occur: skimming, compressing price changes, and delaying product launch. We identify a novel trade off in piracy's...

This paper analyzes the self-identification process and its role in motivation. We build a model of self-confidence where people have imperfect knowledge about their ability, which in most tasks is a complement to effort in determining performance. Higher self-confidence thus enhances...

Bayesian consumers infer that hidden add-on prices (e.g. the cost of ink for a printer) are likely to be high prices. If consumers are Bayesian, firms will not shroud information in equilibrium. However, shrouding may occur in an economy with some myopic (or unaware) consumers. Such shrouding...

This is the first installment of a two-part commentary on the New Brandeis School in Antitrust. In this first part, I examine why the New Brandeis School is correct to reject the consumer welfare standard. Instead of arguing, as the New Brandesians do, that the consumer welfare standard leads to...

This paper is concerned with the situation in which a profit-maximizing monopolist faces consumers that are diverse not only in their preferences but also in their levels of bounded rationality. The behavioral phenomenon considered here is the attraction effects when choices are made across...

This paper studies the relationship between horizontal product differentiation and the welfare effects of third-degree price discrimination in oligopoly. By deriving linear demand from a representative consumer´s utility and focusing on the symmetric equilibrium of a pricing game, we...

Telemonitoring devices can be used to screen consumer characteristics and mitigate information asymmetries that lead to adverse selection in insurance markets. Nevertheless, some consumers value their privacy and dislike sharing private information with insurers. In a second-best efficient...

This paper computes a quality adjusted price index for the personal computer CPU from 1996 to 2000. The index is based on the pure characteristics demand model. I first compute the quality adjusted price index for the whole market, and show that it is very comparable with the hedonic price index...