Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/185779
Authors: 
Murooka, Takeshi
Schwarz, Marco
Year of Publication: 
2018
Series/Report no.: 
Discussion Paper No. 109
Abstract: 
Firms often set long notice periods when consumers cancel a contract, and sometimes do so even when the costs of changing or canceling the contract are small. We investigate a model in which a firm offers a contract to consumers who may procrastinate canceling it due to naive present-bias. We show that the firm may set a long notice period to exploit naive consumers.
Subjects: 
notice periods
procrastination
present bias
time inconsistency
consumer naivete
JEL: 
D04
D18
D21
D40
D90
L51
Document Type: 
Working Paper

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