Arbeitspapier
De-Targeting: Advertising an Assortment of Products to Loss-Averse Consumers
We consider product markets in which consumers are interested only in a specific product category and initially do not know which product category matches their tastes. Using sophisticated tracking technologies, an intermediary can make inferences about a consumer's preferred product category and offer advertising firms the possibility to target their ads to match the consumer's taste. Such targeting reduces overall advertising costs and, as a direct effect, increases industry profits. However, as we show in this paper, when consumers form reference prices and are loss averse, more precise targeting may intensify competition between firms. As a result, firms may earn higher profits from "de-targeted" advertising; i.e., when the intermediary deliberately informs about some products and their price quotes from outside a consumer's preferred product category.
- Language
-
Englisch
- Bibliographic citation
-
Series: Working Paper Series ; No. 16-03
- Classification
-
Wirtschaft
Oligopoly and Other Imperfect Markets
Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- Subject
-
Targeted advertising
Informative advertising
Consumer loss aversion
Reference prices
Contextual inference
Consumer recognition
Behavioral industrial organization
- Event
-
Geistige Schöpfung
- (who)
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Karle, Heiko
Peitz, Martin
- Event
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Veröffentlichung
- (who)
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University of Mannheim, Department of Economics
- (where)
-
Mannheim
- (when)
-
2016
- Handle
- URN
-
urn:nbn:de:bsz:180-madoc-402154
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
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
- Peitz, Martin
- University of Mannheim, Department of Economics
Time of origin
- 2016
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