Bounded Rationality and Industrial Organization

Bounded Rationality and Industrial Organization

Volumn , Issue , 2011, Pages 1-240

  Spiegler, Ran ^a  

^a UNIVERSITY COLLEGE LONDON   (United Kingdom)

Author keywords

Behavioral economics; Behavioral industrial organization; Biased beliefs; Bounded rationality; Competition; Consumer protection; Consumer psychology; Dynamically inconsistent preferences; Industrial organization; Monopoly; Price complexity; Reference dependent choice; Regulation

Indexed keywords

EID: 77951537602     PISSN: None     EISSN: None     Source Type: Book    
DOI: 10.1093/acprof:oso/9780195398717.001.0001     Document Type: Book

References (136)

1. Anderson, C. (2003). The Psychology of Doing Nothing: Forms of Decision Avoidance Result from Reason and Emotion. Psychological Bulletin 129(1), 139-167.
2. Armstrong, M. (1996). Nonlinear Pricing with Imperfectly Informed Consumers. Working paper, Nuffield College.
3. Armstrong, M. (2008). Interactions between Competition and Consumer Policy. Competition Policy International 4(1), 97-147.
4. Armstrong, M., J. Vickers, and J. Zhou (2009). Consumer Protection and the Incentive to Become Informed. Journal of the European Economic Association 7(2-3), 399-410.
5. Ashraf, N., D. Karlan, and W. Yin (2006). Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines. Quarterly Journal of Economics 121(2), 635-672.
6. Ausubel, L. (1991). The Failure of Competition in the Credit Card Market. American Economic Review 81(1), 50-81.
7. Ausubel, L. (1999). Adverse Selection in the Credit Card Market. Working paper, University of Maryland.
8. Bar-Gill, O. (2003). Seduction by Plastic. Northwestern University Law Review 98, 1373.
9. Bar-Gill, O., and O. Ben-Shahar (2004). The Law of Duress and the Economics of Credible Threats. The Journal of Legal Studies 33(2), 391-430.
10. Bondy, J., and U. Murty (1976). Graph Theory with Applications. MacMillan, London.
11. Borgida, E., and R. Nisbett (1977). The Differential Impact of Abrstract vs. Concrete Information on Decisions. Journal of Applied Social Psychlogy 7, 258-271.
12. Brown, J., T. Hossain, and J. Morgan (2010). Shrouded Attributes and Information Suppression: Evidence from Field Experiments. Quarterly Journal of Economics 125(2), 859-876.
13. Bucklin, R., and C. Sismeiro (2003). A Model of Web Site Browsing Behavior Estimated on Clickstream Data. Journal of Marketing Research 40(3), 249-267.
14. Caplin, A., and A. Schotter (2008). The Foundations of Positive and Normative Economics: A Handbook. Oxford University Press, New York.
15. Carlin, B. (2009). Strategic Price Complexity in Retail Financial Markets. Journal of Financial Economics 91(3), 278-287.
16. Carroll, G. D., J. J. Choi, D. Laibson, B. C. Madrian, and A. Metrick (2009). Optimal Defaults and Active Decisions. Quarterly Journal of Economics 124(4), 1639-1674.
17. Chatterjee, K., and R. Krishna (2009). A "Dual Self" Representation for Stochastic Temptation. American Economic Journal: Microeconomics 1(2), 148-167.
18. Chioveanu, I., and J. Zhou (2009). Price Competition with Consumer Confusion. ELSE Working Papers (339).
19. Choi, J., D. Laibson, B. Madrian, and A. Metrick (2010). Reinforcement Learning and Savings Behavior. Journal of Finance 64(6), 2515-2534.
20. Courty, P., and H. Li (2000). Sequential Screening. The Review of Economic Studies 67(4), 697-717.
21. Courty, P., and M. Pagliero (2010). Price Variation Antagonism and Firm Pricing Policies. Journal of Economic Behaviour and Organisation 75(2), 235-249.
22. Dean, M. (2008). Status Quo Bias in Large and Small Choice Sets. Working paper.
23. Dekel, E., and B. L. Lipman (2010). Costly Self Control and Random Self Indulgence. Working paper.
24. Dekel, E., B. L. Lipman, and A. Rustichini (2001). Representing Preferences with a Unique Subjective State Space. Econometrica 69(4), 891-934.
25. Dekel, E., B. L. Lipman, and A. Rustichini (2009). Temptation-Driven Preferences. Review of Economic Studies 76(3), 937-971.
26. Dekel, E., B. L. Lipman, A. Rustichini, and T. Sarver (2007). Representing Preferences with a Unique Subjective State Space: A Corrigendum. Econometrica 75(2), 591-600.
27. DellaVigna, S. (2009). Psychology and Economics: Evidence from the Field. Journal of Economic Literature 47(2), 315-372.
28. DellaVigna, S., and U. Malmendier (2004). Contract Design and Self-Control: Theory and Evidence. Quarterly Journal of Economics 119(2), 353-402.
29. DellaVigna, S., and U. Malmendier (2006). Paying Not to Go to the Gym. American Economic Review 96(3), 694-719.
30. Dow, J. (1991), Search Decisions with Limited Memory. Review of Economic Studies 58(1), 1-14.
31. Eliaz, K., and R. Spiegler (2006). Contracting with Diversely Naive Agents. Review of Economic Studies 73, 689-714.
32. Eliaz, K., and R. Spiegler (2008a). Consideration Sets and Competitive Marketing. Review of Economic Studies, forthcoming.
33. Eliaz, K., and R. Spiegler (2008b). Consumer Optimism and Price Discrimination. Theoretical Economics 3, 459-497.
34. Eliaz, K., and Spiegler, R. (2009). On the Strategic Use of Attention Grabbers. Theoretical Economics, forthcoming.
35. Ellison, G. (2006). Bounded Rationality in Industrial Organization, In R. Blundell, W. Newey and T. Persson, (eds), Advances in Economics and Econometrics: Theory and Applications, Ninth World Congress of the Econometric Society, Volume II, pp. 142-174. Cambridge University Press, New York.
36. Ellison, G., and S. Fisher Ellison (2009). Search, Obfuscation, and Price Elasticities on the Internet. Econometrica 77(2), 427-452.
37. Ellison, G., and D. Fudenberg (1995). Word-of-Mouth Communication and Social Learning. Quarterly Journal of Economics 110(1), 93-125.
38. Ellison, G., and A. Wolitzky (2009). A Search Cost Model of Obfuscation. NBER Working Paper 15237.
39. Esponda, I. (2008), Behavioral Equilibrium in Economies with Adverse Selection. American Economic Review 98(4), 1269-1291.
40. Esteban, S., and E. Miyagawa (2006a). Optimal Menus of Menus with Self-Control Preferences. Working paper, Penn State University.
41. Esteban, S., and E. Miyagawa (2006b). Temptation, Self-Control, and Competitive Nonlinear Pricing. Economics Letters 90(3), 348-355.
42. Eyster, E., and M. Rabin (2005). Cursed Equilibrium. Econometrica 73(5), 1623-1672.
43. Fershtman, C., and A. Fishman (1994), The "Perverse" Effects of Wage and Price Controls in Search Markets. European Economic Review 38(5), 1099-1112.
44. Frederick, S., G. Loewenstein and T. O'Donoghue (2002). Time Discounting and Time Preference: A Critical Review. Journal of Economic Literature 40, 350-401.
45. Friedman, M. (1953). The Methodology of Positive Economics. The Philosophy of Economics: An Anthology 2, 180-213.
46. Gabaix, X., and D. Laibson (2006). Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets. Quarterly Journal of Economics 121(2), 505-540.
47. Gilbert, D. (2006), Stumbling on Happiness, Knopf, New York.
48. Gilboa, I., and D. Schmeidler (2001). A Theory of Case-Based Decisions. Cambridge University Press, Cambridge.
49. Gottlieb, D. (2008). Competition over Time-Inconsistent Consumers. Journal of Public Economic Theory 10 (4), 673-684.
50. Grubb, M. D. (2009). Selling to Overconfident Consumers. American Economic Review 99(5), 1770-1807.
51. Gul, F., and W. Pesendorfer (2001). Temptation and Self-Control. Econometrica 69(6), 1403-1435.
52. Gul, F., and W. Pesendorfer (2004). Self-Control and the Theory of Consumption. Econometrica 72(1), 119-158.
53. Gul, F., and W. Pesendorfer (2005). The Revealed Preference Theory of Changing Tastes. Review of Economic Studies 72(2), 429-448.
54. Hall, R., and C. Hitch (1939). Price Theory and Business Behaviour. Oxford Economic Papers 2(1), 12-45.
55. Heidhues, P., and B. KoHoszegi (2005). The Impact of Consumer Loss Aversion on Pricing. Working paper.
56. Heidhues, P., and B. KoHoszegi (2008). Competition and Price Variation When Consumers are Loss Averse. American Economic Review 98(4), 1245-1268.
57. Heidhues, P., and B. KoHoszegi (2009). Futile Attempts at Self-Control. Journal of the European Economic Association 7, 423-434.
58. Heidhues, P., and B. KoHoszegi (2010). Exploiting Naivete about Self-Control in the Credit Market. American Economic Review, forthcoming.
59. Huberman, G., S. Iyengar, and W. Jiang (2007). Defined Contribution Pension Plans: Determinants of Participation and Contributions Rates. Journal of Financial Services Research 31(1), 1-32.
60. Isoni, A., G. Loomes, and R. Sugden (2010). The Willingness to Pay-Willingness to Accept Gap, the "Endowment Effect," Subject Misconceptions, and Experimental Procedures for Eliciting Valuations: a Reassessment. American Economic Review, forthcoming.
61. Iyengar, S. (2010). The Art of Choosing. Twelve, New York.
62. Iyengar, S., and E. Kamenica (2008). Choice Proliferation, Simplicity Seeking, and Asset Allocation. Journal of Public Economics 94(1), 530-539.
63. Iyengar, S., and M. Lepper (2000). When Choice Is Demotivating: Can One Desire Too Much of a Good Thing? Journal of Personality and Social Psychology 79(6), 995-1006.
64. Jehiel, P. (2005). Analogy-Based Expectation Equilibrium. Journal of Economic Theory 123(2), 81-104.
65. Jehiel, P., and F. Koessler (2008). Revisiting Games of Incomplete Information with Analogy-Based Expectations. Games and Economic Behavior 62(2), 533-557.
66. Jolls, C. (1997), Contracts as Bilateral Commitments: A New Perspective on Contract Modification. The Journal of Legal Studies 26(1), 203-237.
67. Kahneman, D., J. L. Knetsch, and R. Thaler (1986). Fairness as a Constraint on Profit Seeking: Entitlements in the Market. American Economic Review 76(4), 728-741.
68. Kahneman, D., P. Slovic and A. Tversky (1982). Judgment under Uncertainty: Heuristics and Biases. Cambridge University Press, Cambridge.
69. Kahneman, D., and A. Tversky (1971). Belief in the Law of Small Numbers. Psychological Bulletin 2, 105-110.
70. Kahneman, D., and A. Tversky (1974). Judgment under Uncertainty: Heuristics and Biases. Science 185, 1124-1131.
71. Kahneman, D., and A. Tversky (1979). Prospect Theory: An Analysis of Decision under Risk. Econometrica 47(2), 263-292.
72. Kahneman, D., and A. Tversky (2000). Choices, Values, and Frames, Cambridge University Press, Cambridge.
73. Kamenica, E. (2008). Contextual Inference in Markets: On the Informational Content of Product Lines. American Economic Review 98(5), 2127-2149.
74. Kareev, Y., S. Arnon, and R. Horwitz-Zeliger (2002). On the Misperception of Variability. Journal of Experimental Psychlogy: General 131, 287-297.
75. Karle, H. and M. Peitz (2010). Pricing and Information Disclosure in Markets with Loss-Averse Consumers. CEPR Working Paper, forthcoming.
76. KoHoszegi, B. (2005). On the Feasibility of Market Solutions to Self-Control Problems. Swedish Economic Policy Review 12, 71-94.
77. KoHoszegi, B. (2009), Utility from Anticipation and Personal Equilibrium. Economic Theory 44 (3), 415-444.
78. KoHoszegi, B., and M. Rabin (2006). A Model of Reference-Dependent Preferences. Quarterly Journal of Economics 121(4), 1133-1165.
79. Klemperer, P. (1995). Competition When Consumers Have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade. Review of Economic Studies 62(4), 515-539.
80. Laibson, D. (1997). Golden Eggs and Hyperbolic Discounting. Quarterly Journal of Economics 112(2), 443-477.
81. Landier, A., and D. Thesmar (2009). Financial Contracting with Optimistic Entrepreneurs. Review of Financial Studies 22(1), 117-150.
82. Loewenstein, G., T. O'Donoghue, and M. Rabin (2003). Projection Bias in Predicting Future Utility. Quarterly Journal of Economics 118, 1209-1248.
83. Lucas, R. E., Jr. (1976). Econometric Policy Evaluation: A Critique, In Carnegie-Rochester Conference Series on Public Policy, 19-46.
84. Mariotti, M., and P. Mazini (2009). Choice over Time, In P. Anand, P. Pattanaik and C. Puppe, (eds.), Handbook of Rational and Social Choice, pp. 239-270. Oxford Univeristy Press, New York.
85. Markman, A., and S. Zhang (1998). Overcoming the Early Entrant Advantage: The Role of Alignable and Nonalignable Differences. Journal of Marketing Research 35(4), 413-426.
86. Mas-Colell, A., M. Whinston, and J. Green (1995). Microeconomic Theory, Oxford University Press, New York.
87. Masatlioglu, Y., and E. Ok (2005). Rational Choice with Status Quo Bias. Journal of Economic Theory 121(1), 1-29.
88. Meyer, D., and S. Muthaly (2008). New Measures and a New Model for Television Network Loyalty (MOTNL). Marketing Bulletin 19.
89. Milgrom, P., and J. Roberts (1986). Relying on the Information of Interested Parties. The RAND Journal of Economics 17(1), 18-32.
90. Miravete, E. J. (2003). Choosing the Wrong Calling Plan? Ignorance and Learning. American Economic Review 93(1), 297-310.
91. Nedungadi, P. (1990). Recall and Consumer Consideration Sets: Influencing Choice without Altering Brand Evaluations. The Journal of Consumer Research 17(3), 263-276.
92. O'Donoghue, T., and M. Rabin (1999). Incentives for Procrastinators. Quarterly Journal of Economics 114(3), 769-816.
93. Ok, E., P. Ortoleva, and G. Riella (2009). Theory of Product Differentiation in the Presence of the Attraction Effect. Working paper.
94. Okun, A. M. (1980). Rational-Expectations-with-Misperceptions as a Theory of the Business Cycle. Journal of Money, Credit and Banking 12(4), 817-825.
95. Osborne, M., and A. Rubinstein (1998). Games with Procedurally Rational Players. American Economic Review 88, 834-849.
96. Osborne, M., and A. Rubinstein (2003). Sampling Equilibrium with an Application to Strategic Voting. Games and Economic Behavior 45, 434-441.
97. Peleg, B., and M. Yaari (1973). On the Existence of a Consistent Course of Action When Tastes are Changing. Review of Economic Studies 40, 391-401.
98. Phelps, E. S., and R. A. Pollak (1968). On Second-Best National Saving and Game-Equilibrium Growth. Review of Economic Studies 35(2), 185-199.
99. Piccione, M., and A. Rubinstein (1997). On the Interpretation of Decision Problems with Imperfect Recall. Games and Economic Behavior 20(1), 3-24.
100. Piccione, M., and A. Rubinstein (2003). Modeling the Economic Interaction of Agents with Diverse Abilities to Recognize Equilibrium Patterns. Journal of the European Economic Association 1(1), 212-223.
101. Piccione, M., and R. Spiegler (2009). Price Competition under Limited Comparability. ELSE Working Paper (336).
102. Plott, C., and K. Zeiler (2005). The Willingness to Pay-Willingness to Accept Gap, the "Endowment Effect," Subject Misconceptions, and Experimental Procedures for Eliciting Valuations. American Economic Review 95(3), 530-545.
103. Rabin, M. (1998). Psychology and Economics. Journal of Economic Literature 36(1), 11-46.
104. Rabin, M. (2002). A Perspective on Psychology and Economics. European Economic Review 46(4-5), 657-685.
105. Radner, R., and A. Sundararajan (2005). Dynamic Pricing of Network Goods with Boundedly Rational Consumers. Working Paper CeDER-05-08, Center for Digital Economy Research.
106. Ritov, I., and J. Baron (1992). Status-Quo and Omission Biases. Journal of Risk and Uncertainty 5(1), 49-61.
107. Rubinstein, A. (1993). On Price Recognition and Computational Complexity in a Monopolistic Model. The Journal of Political Economy 101(3), 473-484.
108. Rubinstein, A. (1998). Modeling Bounded Rationality. The MIT Press, Cambridge, MA.
109. Rubinstein, A. (2003). "Economics and Psychology"? The Case of Hyperbolic Discounting. International Economic Review 44(4), 1207-1216.
110. Rubinstein, A. (2006), Comments on Behavioral Economics, In R. Blundell, W. Newey, and T. Persson (eds.), Advances in Economics and Econometrics: Theory and Applications, Ninth World Congress of the Econometric Society, Volume II, pp. 246-254. Cambridge University Press, New York.
111. Rubinstein, A., and R. Spiegler (2008). Money Pumps in the Market. Journal of the European Economic Association 6(1), 237-253.
112. Samuelson, W., and R. Zeckhauser (1988). Status Quo Bias in Decision Making. Journal of Risk and Uncertainty 1(1), 7-59.
113. Sandroni, A., and F. Squintani, F. (2007). Overconfidence, Insurance, and Paternalism. American Economic Review 97(5), 1994-2004.
114. Scheibehenne, B., R. Greifender, and P. Todd (2010). Can There Ever Be Too Many Options? A Meta-Analytic Review of Choice Overload. Journal of Consumer Research 37.
115. Simon, H. (1982). Models of Bounded Rationality, Volume 1-2, The MIT Press, Cambridge, MA.
116. Smallwood, D. E., and J. Conlisk (1979). Product Quality in Markets Where Consumers Are Imperfectly Informed. Quarterly Journal of Economics 93(1), 1-23.
117. Spiegler, R. (2006a). Competition over Agents with Boundedly Rational Expectations. Theoretical Economics 1(2), 207-231.
118. Spiegler, R. (2006b). The Market for Quacks. Review of Economic Studies 73(4), 1113-1131.
119. Spiegler, R. (2010a). "But Can't We Get the Same Thing with a Standard Model?" Rationalizating Bounded-Rationality Models. Economics and Philosophy, forthcoming.
120. Spiegler, R. (2010b). Monopoly Pricing When Consumers Are Antagonized by Unexpected Price Increases: A "Cover Version" of the Heidhues-Koszegi-Rabin Model. ELSE Working Papers (369).
121. Spinnewijn, J. (2009a). Insurance and Perceptions: How to Screen Optimists and Pessimists. Working paper, MIT.
122. Spinnewijn, J. (2009b). Unemployed but Optimistic: Optimal Insurance Design with Biased Beliefs. Working paper, MIT.
123. Stahl, D. (1989). Oligopolistic Pricing with Sequential Consumer Search. American Economic Review 79(4), 700-712.
124. Stewart, N., N. Chater, and G. D. A. Brown (2006). Decision by Sampling. Cognitive Psychology 53(1), 1-26.
125. Strotz, R. (1956). Myopia and Inconsistency in Dynamic Utility Maximization. Review of Economic Studies 23, 165-180.
126. Szech, N. (2009). Price and Quality Competition with Boundedly Rational Consumers. Working paper, Bonn Graduate School of Economics.
127. Thaler, R. (1980). Toward a Positive Theory of Consumer Choice. Journal of Economic Behavior and Organization 1(1), 39-60.
128. Thaler, R. H. (1994). Quasi Rational Economics, Russell Sage Foundation, New York.
129. Thaler, R. H., and C. R. Sunstein (2008). Nudge: Improving Decisions about Health, Wealth and Happiness, Yale University Press, New Haven, CT.
130. Tirole, J. (1988). The Theory of Industrial Organization. The MIT Press, Cambridge, MA.
131. Tversky, A., and E. Shafir (1992). Choice under Conflict: The Dynamics of Deferred Decision. Psychological Science, pp. 358-361.
132. Uthemann, A. (2005), Competitive Screening of Consumers with Noncommon Priors. Working paper, UCL.
133. Varian, H. R. (1980), A Model of Sales. American Economic Review 70(4), 651-659.
134. Wilson, C. M. (2010), Ordered Search and Equilibrium Obfuscation. International Journal of Industrial Organization 28(5), 496-506.
135. Zauberman, G. (2003), The Intertemporal Dynamics of Consumer Lock-in. Journal of Consumer Research 30(3), 405-419.
136. Zhou, J. (2009), Reference Dependence and Market Competition. Journal of Economics, Management and Strategy, forthcoming.