A Cue-Theory of Consumption
| Title: | A Cue-Theory of Consumption |
| Author: | Laibson, David I. |
| Citation: | Laibson, David I. 2001. A cue-theory of consumption. Quarterly Journal of Economics 116(1): 81-119. |
| Full Text & Related Files: |
Laibson_Cue-Theory.pdf (223.0Kb; PDF) 
|
| Abstract: | Psychological experiments demonstrate that repeated pairings of a cue and a consumption good eventually create cue-based complementarities: the presence of the cue raises the marginal utility derived from consumption. In this paper, such dynamic preferences are embedded in a rational choice model. Behavior that arises from this model is characterized by endogenous cue sensitivities, costly cue-management, commitment, and cue-based spikes in impatience. The model is used to understand addictive/habit-forming behaviors and marketing. The model explains why preferences change rapidly from moment to moment, why temptations should sometimes be avoided, and how firms package and position goods. |
| Published Version: | http://dx.doi.org/10.1162/003355301556356 |
| Terms of Use: | This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA |
| Citable link to this page: | http://nrs.harvard.edu/urn-3:HUL.InstRepos:4481496 |
This item appears in the following Collection(s)
-
FAS Scholarly Articles [5171]
Peer reviewed scholarly articles from the Faculty of Arts and Sciences of Harvard University
Contact administrator regarding this item (to report mistakes or request changes)
