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Title:An empirical test of theories of price valuation using a semiparametric approach, reference prices, and accounting for heterogeneity PDF Logo
Authors:Boztuğ, Yasemin
Hildebrandt, Lutz
Issue Date:2005
Series/Report no.:SFB 649 discussion paper 2005,057
Abstract:In this paper we estimate and empirically test different behavioral theories of consumer reference price formation. Two major theories are proposed to model the reference price reaction: assimilation contrast theory and prospect theory. We assume that different consumer segments will use different reference prices. The study builds on earlier research by Kalyanaram and Little (1994); however, in contrast to their work, we use parametric and semiparametric approaches to detect the structure of the underlying data sets. The different models are tested using a program module in GAUSS that was able to account for heterogeneity. The model types were calibrated by a simulation study. The calibrated modules were then used to analyze real market data.
JEL:C14
C23
C25
D12
M31
Document Type:Working Paper
Appears in Collections:SFB 649 Discussion Papers, HU Berlin

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