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Buy it Now or Later, or Not: Loss Aversion in Advance Purchasing

Office of Alumni and External Relations    2021-10-13

Subject: Buy it Now or Later, or Not: Loss Aversion in Advance Purchasing

Guest: Senran Lin,  Assistant Professor, Southwestern University of Finance and Economics

Host: Xizhi Lin, Assistant Professor, Antai

Time: Wednesday, Oct 20, 2021,  14:30-16:00

Venue: A511, Antai


Abstract:

This paper studies the advance-purchase problem when a consumer has reference-dependent preferences in the form of Koszegi and Rabin (2009) in which planning affects reference formation. When the consumer exhibits plan revisability, loss aversion increases the price at which she is willing to pre-purchase. This implies that loss aversion can lead to risk-seeking. Moreover, I endogenize the seller's price-commitment behavior in the advance-purchase problem. The result shows that the seller commits to his spot price even if he is not obliged to, which was treated as given in previous literature.

Bio:

Senran Lin specializes in Psychological Game Theory and Experimental Economics. He is currently an Assistant Professor at the China Center for Behavioral Economics and Finance (CCBEF) of Southwestern University of Economics and Fincance (SWUFE). He received his PhD in Economics from University of Arizona, and prior to that he was at Stony Brook University and ShanDong University.

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