Biased Beliefs without Dynamic Inconsistency

Spiegler Ran

in Bounded Rationality and Industrial Organization

Published in print February 2011 | ISBN: 9780195398717
Published online September 2011 | e-ISBN: 9780199896790 | DOI:
Biased Beliefs without Dynamic Inconsistency

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This chapter analyzes monopoly and competitive pricing in the presence of dynamically consistent consumers who hold biased beliefs regarding their future preferences. The models examined in this chapter highlight biases such as over-optimism, over-confidence and unforeseen contingencies to illuminate phenomena such as add-on pricing and three-part tariffs.

Keywords: biased beliefs; add-on pricing; three-part tariffs; over-optimism; over-confidence; unforeseen contingencies

Chapter.  10192 words. 

Subjects: Economics

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