I show in a setting of a buyer and seller with the same preferences trading two related assets so as to share volatility risk that illiquidity and virtually all impediments to trade cannot be priced in the absence of excess short-selling costs. This is because the buyer values the asset at the...

Artificial Intelligence (AI) automates human decisions. Algorithmic pricing, a form of AI, sets prices by a computer. It is now common currency in ride-hailing, travel, drugs, gasoline, online goods---And great price variability characterizes all those settings. However, little is known about...

Veblen effects and counter-effects occur when product prices signal consumer wealth. This study quantifies such effects and counter-effects through a quasiexperimental approach that addresses identification threats inherent to social interactions, unobserved supply factors, alternative social...

This paper analyzes the inter-temporal price discrimination problem of a durable good monopolist facing time-inconsistent consumers. We look at both cases of sophisticated and naive time-inconsistent consumers, but the emphasis is on the naive case. When consumers are naive, we first need to...

This paper analyzes lenders' pricing strategies in the business-to-customer (B2C) unsecured loan market by using a proprietary dataset of approximately 3 million unsecured consumer loans from a B2C online retailer in China. We find that lenders' decisions to invite customers are based on...

How should firms optimally choose prices and promotional strategies and how should they position their products when consumers are "relative thinkers"? We provide answers in a model that extends the seminal contributions of Varian (1980) and Narasimhan (1988) and derive both managerial...

This paper generalizes the price discrimination framework of Mussa and Rosen (1978) by considering salience-driven consumer preferences in the sense of Bordalo et al. (2013b). Consumers with salience-driven preferences give a higher weight to attributes that vary more. This reduces the...

With the advent of big data, unique opportunities arise for data collection and analysis and thus for personalized pricing. We simulate a self-learning algorithm setting personalized prices based on additional information about consumer sensitivities in order to analyze market outcomes for...

We consider a 2-period model in which buyers can store the good - purchasing in advance of consumption so as to realize potential gains from inter-temporal price arbitrage - and examine the impact of market structure on the resulting inter-temporal price path and allocation. The main result is...

This paper estimates the elasticity of intertemporal substitution in consumption (sigma). We exploit a natural experiment provided by a change in the Indian banking legislation which authorized all the deposit collecting institutions to offer a higher interest rate on deposits to citizens above...