Submitted Working Papers
Mallucci, P., Cui, T., & Zhang, Z. Competitive Implications of Haggling.
Firms in auto and furniture industries commonly post their prices, but also allow consumers to haggle on final purchase prices. Using a Bertrand duopoly/Nash bargaining model, we investigate how haggling can mitigate price competition between firms when firms are competing for both hagglers and non-hagglers. Our analysis shows that this dual pricing mechanism can incentivize the competing firms to collude tacitly if the number of hagglers in the market is sufficiently large. Therefore, haggling facilitates not only price discrimination as recognized previously in the literature, but also price collusion. Three incentive-aligned experiments support this prediction.
Mallucci, P., Narasimhan, O., & John, G. Contractual Choices and their Consequences in a Time Inconsisten World.
In this paper we seek to isolate the effects of time inconsistent preferences on the gap between planned, expected and realized consumption of investment goods. Using data on participation in trips in a hiking program over multiple years, we show that subscribers did not participate in sufficient trips to make subscription a lower cost option than the pay-per-trip option. We attribute this behavior to time inconsistent preferences, and rule out alternative explanations including unobserved preferences for on format over another, and/or cognitive heuristics that bias decision-making. Using stated preference data from a discrete choice conjoint study, we add to the robustness of our results and further rule out unobserved preferences and/or willingness to pay for commitment as alternative explanations. Finally, unlike the theoretical equilibrium contrac proposed for investment goods, we suggest that both subscriptions and per-per-use options can co-exist in the field.
Mallucci, P., John, G., & Cui, T. The Effect of Social Pressure in Corporate Social Responsibility.