Consumer Inattention and Bill-Shock Regulation

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چکیده

To solve the firm’s problem in both attentive and inattentive cases I proceed in two steps. First, I fix a perceived utility U∗ to be offered and solve for the optimal price vector and allocation which implements U∗ subject to the no-free-lunch (NFL) constraint. The price vector and allocation determine expected surplus S and true expected-utility U . Hence the first step derives an optimal markup, μ (U∗), to be charged as a function of U∗. The second step is to choose the perceived expected-utility U∗ which maximizes profits, Π = G (U∗)μ (U∗), subject to feasibility under NFL.

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تاریخ انتشار 2012