Behavioral Decision-Making: An Application to the Setting of Magazine Subscription Prices

Fiona M. Scott Morton

Yale School of Management; National Bureau of Economic Research (NBER)

Sharon M. Oster

Yale School of Management

November 2003

NBER Working Paper No. w10120

Abstract:

Using data from American magazines, we explore the relationship between subscription discounts and magazine characteristics. We focus in particular on those magazine features that might lead time-inconsistent consumers to wish to engage in commitment behavior. We find that for magazines whose payoff is in the future and/or that are meritorious for other reasons, subscription discounts are lower all else equal. This finding suggests that publishers may be able to set subscription prices in order to extract rents from consumers’ willingness to tie their own hands in terms of their future reading.

Behavioral Decision-Making- An Application to the Setting of Magazine Subscription Prices