蝌蚪网

This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. 蝌蚪网
  3. 蝌蚪网 Journal: Microeconomics
  4. August 2018
  5. Contracts with Framing

蝌蚪网 Journal:
Microeconomics

ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)

Contracts with Framing

  • Yuval Salant
  • Ron Siegel
蝌蚪网 Journal: Microeconomics
vol. 10, no. 3, August 2018
(pp. 315–46)
Download Full Text PDF

Abstract

We study a model of contracts in which a profit-maximizing seller uses framing to influence buyers' purchasing behavior. Framing temporarily affects how buyers evaluate different products, and buyers can renege on their purchases after the framing effect wears off. We characterize the optimal contracts with framing and their welfare properties in several settings. Framing that is not too strong reduces total welfare in regulated markets with homogenous buyers, but increases total welfare in markets with heterogenous buyers when the proportion of buyers with low willingness to pay is small.

Citation

Salant, Yuval, and Ron Siegel. 2018. "Contracts with Framing." 蝌蚪网 Journal: Microeconomics 10 (3): 315–46. DOI: 10.1257/mic.20160230

Additional Materials

JEL Classification

  • D11 Consumer Economics: Theory
  • D82 Asymmetric and Private Information; Mechanism Design
  • D86 Economics of Contract: Theory