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dc.contributor.authorKonieczny, Jerzy D.en_US
dc.contributor.authorRumler, Fabioen_US
dc.date.accessioned2009-01-28T15:00:00Z-
dc.date.available2009-01-28T15:00:00Z-
dc.date.issued2006en_US
dc.identifier.urihttp://hdl.handle.net/10419/17864-
dc.description.abstractWe ask why, in many circumstances and many environments, decision-makers choose to act on a time-regular basis (e.g. adjust every six weeks) or on a stateregular basis (e.g. set prices ending in a 9), even though such an approach appears suboptimal. The paper attributes regular behaviour to adjustment cost heterogeneity. We show that, given the cost heterogeneity, the likelihood of adopting regular policies depends on the shape of the benefit function: the flatter it is, the more likely, ceteris paribus, is regular adjustment. We provide sufficient conditions under which, when policymakers differ with respect to the shape of the benefit function (as in Konieczny and Skrzypacz, 2006), the frequency of adjustments across markets is negatively correlated with the incidence of regular adjustments. On the other hand, if policymakers differences are due to the level of adjustment costs (as in Dotsey, King and Wolman, 1999), then the correlation is positive. To test the model we apply it to optimal pricing policies. We use a large Austrian data set, which consists of the direct price information collected by the statistical office and covers 80% of the CPI over eight years. We run cross-sectional tests, regressing the proportion of attractive prices and, separately, the excess proportion of price changes at the beginning of a year and at the beginning of a quarter, on various conditional frequencies of adjustment, inflation and its variability, dummies for good types, and other relevant variables. We find that the lower is, in a given market, the conditional frequency of price changes, the higher is the incidence of time- and state-regular adjustment.en_US
dc.language.isoengen_US
dc.publisherKiel Institute for the World Economy (IfW) Kielen_US
dc.relation.ispartofseriesKieler Arbeitspapiere 1352en_US
dc.subject.jelE31en_US
dc.subject.jelD01en_US
dc.subject.jelE52en_US
dc.subject.jelL11en_US
dc.subject.ddc330en_US
dc.subject.keywordOptimal pricingen_US
dc.subject.keywordattractive pricesen_US
dc.subject.keywordmenu costsen_US
dc.subject.stwBetriebliche Preispolitiken_US
dc.subject.stwStaatliche Preispolitiken_US
dc.subject.stwPreistheorieen_US
dc.subject.stwVerhaltensökonomiken_US
dc.subject.stwSchätzungen_US
dc.subject.stwLebenshaltungsindexen_US
dc.subject.stwÖsterreichen_US
dc.titleRegular Adjustment: Theory and Evidenceen_US
dc.typeWorking Paperen_US
dc.identifier.ppn534972993en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
Appears in Collections:Kieler Arbeitspapiere, IfW
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