Marketing Papers

Document Type

Technical Report

Date of this Version

2017

Publication Source

Management Science

Volume

64

Issue

1

Start Page

421

Last Page

436

DOI

10.1287/mnsc.2016.2605

Abstract

We study the prevalence of multiattribute loss aversion and reference effects in a revenue management setting based on data of individual-level purchases over a series of concert performances. The reference dependence that drives consumer choice is not only based on the price but also on observed sales (as a fraction of the seating capacity) during their past visits. We find that consumers suffer from loss aversion on both prices and seats sold: consumers incur significant utility loss when prices are above their references or when the actual seat sales are lower than their references. We suggest pricing policies that can address consumer decisions driven by such reference dependence and loss aversion.

Copyright/Permission Statement

Originally published in Management Science © 2017 INFORMS

This is a pre-publication version. The final version is available at http://dx.doi.org/10.1287/mnsc.2016.2605

Keywords

multiattribute reference dependence, loss aversion, capacity-reference levels, empirical operations management, marketing

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Date Posted: 15 June 2018

This document has been peer reviewed.