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- W3123996898 abstract "This paper proposes a mechanism leading to rigid pricing as an optimal strategy. It applies a framework of rational inattention to study the pricing strategies of a monopolistic seller facing a consumer with limited information capacity. The consumer needs to process information about prices, while the seller is perfectly attentive. It turns out that the seller chooses to price discretely even for a continuous range of unit input costs, i.e. charges a finite set of different prices only. The price usually stays constant when unit input cost changes only a little. The seller does so to provide the consumer with easily observable prices and thus stimulate her to consume more. In the model's dynamic version, this mechanism implies that prices respond to cost shocks with a delay." @default.
- W3123996898 created "2021-02-01" @default.
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- W3123996898 date "2010-01-01" @default.
- W3123996898 modified "2023-10-17" @default.
- W3123996898 title "Rigid Pricing and Rationally Inattentive Consumer" @default.
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- W3123996898 doi "https://doi.org/10.2139/ssrn.1653309" @default.
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