Packaging of sin goods - Commitment or exploitation?

We consider the shopping and consumption decision of an individual with a self-control problem. The consumer believes that restricting the consumption of a sinful product (such as chips) is in his long-run interest. But when facing the actual decision he is tempted to overeat. We ask how firms react...

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Bibliographic Details
Published inIDEAS Working Paper Series from RePEc
Main Authors Christensen, Else Gry Bro, Nafziger, Julia
Format Paper
LanguageEnglish
Published St. Louis Federal Reserve Bank of St. Louis 01.01.2016
Subjects
Consumption
Economic models
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Summary:We consider the shopping and consumption decision of an individual with a self-control problem. The consumer believes that restricting the consumption of a sinful product (such as chips) is in his long-run interest. But when facing the actual decision he is tempted to overeat. We ask how firms react to such self-control problems, and possibly exploit them, by offering different package sizes. In a competitive market, either one or three package sizes are offered. In contrast to common intuition, the large, and not the small package might be a commitment device. The latter may serve to exploit the naive consumer. (C) 2015 Elsevier B.V. All rights reserved.