Durable Goods Lease Contracts and Used-Good Market Behavior: An Experimental Study
نویسندگان
چکیده
Leasing has become an increasingly prominent way for consumers to acquire durable goods such as automobiles. How markets respond to changes in lease contracts has enormous implications to producers such as Ford Motor Company. In this paper, an experimental model was developed to study the interaction between lease contracts that embed an option to purchase and an underlying used-goods market. Experiments, with subjects playing roles of heterogeneous consumers, have confirmed many salient features predicted by a corresponding theoretical model. These features include the segmentation of subjects into classes of behavior, and directional response to pricing in the used-good market to the provision in lease contracts.
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