Consumer Cognition and Pricing in the Nines of Oligopolistic Markets

dc.contributor.author	Basu, Kaushik
dc.date.accessioned	2006-08-30T03:44:28Z
dc.date.available	2006-08-30T03:44:28Z
dc.date.issued	2006-08-30T03:44:28Z
dc.description.abstract	The paper fully characterizes the Bertrand equilibria of oligopolistic markets where consumers may ignore the last (i.e., the right-most) digits of prices. Consumers, in this model, do not do this reflexively or out of irrationality, but only when they expect the time cost of acquiring full cognizance of the exact price to exceed the expected loss caused by the slightly erroneous amounts that are likely to be purchased or the slightly higher price that may be paid by virtue of ignoring the information concerning the last digits of prices. It is shown that in this setting there will always exist firms that set prices that end in nine though there may also be some (nonstrict) equilibria where a non-nine price ending occurs. It is shown that all firms earn positive profits even in Bertrand equilibria. The model helps us understand in what kinds of markets we are most likely to encounter pricing in the nines.	en_US
dc.format.extent	122187 bytes
dc.format.mimetype	application/pdf
dc.identifier.uri	https://hdl.handle.net/1813/3485
dc.language.iso	en_US
dc.title	Consumer Cognition and Pricing in the Nines of Oligopolistic Markets	en_US

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