Arbeitspapier

Creating Attachment through Advertising: Loss Aversion and Pre–Purchase Information

Complementing the existing literature on anchoring effects and loss aversion, we analyze how firms can influence loss–averse consumers’ willingness to pay by product information in the form of informative advertising rather than by prices. We find that consumers’ willingness to pay is greatest when only partial information about the product—i.e. only a fraction of product attributes—is disclosed, and that partial information disclosure is the optimal mode of advertising for a monopolistic firm. This causes the consumers’ realized product valuation to diverge from their intrinsic product valuation, which leads to a reduction of consumer surplus. Consequently, transparency policies can help to protect consumers.

Language
Englisch

Bibliographic citation
Series: Economics Working Paper Series ; No. 13/177

Classification
Wirtschaft
Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
Monopolization; Horizontal Anticompetitive Practices
Advertising
Subject
Advertising
Loss Aversion
Information Disclosure
Produktinformation
Zahlungsbereitschaftsanalyse
Werbewirkung
Konsumentenverhalten
Risikoaversion

Event
Geistige Schöpfung
(who)
Karle, Heiko
Event
Veröffentlichung
(who)
ETH Zurich, CER-ETH - Center of Economic Research
(where)
Zurich
(when)
2013

DOI
doi:10.3929/ethz-a-009752040
Handle
Last update
10.03.2025, 11:43 AM CET

Data provider

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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.

Object type

  • Arbeitspapier

Associated

  • Karle, Heiko
  • ETH Zurich, CER-ETH - Center of Economic Research

Time of origin

  • 2013

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