Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/71981
Authors: 
Esteban, Susanna
Miyagawa, Eiichi
Shum, Matthew
Year of Publication: 
2003
Series/Report no.: 
Working Papers, The Johns Hopkins University, Department of Economics 503
Abstract: 
This paper studies optimal nonlinear pricing for a monopolist when consumers' preferences exhibit temptation and self-control as in Gul and Pesendorfer (2001a). Consumers are subject to temptation inside the store but exercise self-control, and those foreseeing large self-control costs do not enter the store. Consumers differ in their preferences under temptation. When all consumers are tempted by more expensive, higher quality choices, the optimal menu is a singleton, which saves consumers from self-control and extracts consumers' commitment surplus. When some consumers are tempted by cheaper, lower quality choices, the optimal menu may contain a continuum of choices.
Subjects: 
Temptation
self-control
commitment
nonlinear pricing
price discrimination.
JEL: 
D42
D82
L12
L15
Document Type: 
Working Paper

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