Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25076
Authors: 
Boztuğ, Yasemin
Hildebrandt, Lutz
Year of Publication: 
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

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