publication . Article . 2010

Limited Memory, Categorization, and Competition

Yuxin Chen; Ganesh Iyer; Amit Pazgal;
Open Access
  • Published: 01 Jan 2010 Journal: Marketing Science, volume 29, issue 4 07-08, pages 650-670
This paper investigates the effects of a limited consumer memory on the price competition between firms. It studies a specific aspect of memory---namely, the categorization of available price information that the consumers may need to recall for decision making. This paper analyzes competition between firms in a market with uninformed consumers who do not compare prices, informed consumers who compare prices but with limited memory, and informed consumers who have perfect memory. Consumers, aware of their memory limitations, choose how to encode the prices into categories, whereas firms take the limitations of consumers into account in choosing their pricing str...
Persistent Identifiers
ACM Computing Classification System: TheoryofComputation_MISCELLANEOUS
free text keywords: bounded rationality, memory, behavioral economics, categorization, competitive strategy, pricing strategy, Marketing, Business and International Management, Competitive advantage, Microeconomics, Behavioral economics, Economics, Bounded rationality, Encoding (memory), Pricing strategies, Market competition, Recall, Categorization
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