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Are Consumers Myopic? Evidence from New and Used Car Purchases

The American economic review, 2013-02, Vol.103 (1), p.220-256 [Peer Reviewed Journal]

Copyright© 2013 The American Economic Association ;Copyright American Economic Association Feb 2013 ;ISSN: 0002-8282 ;EISSN: 1944-7981 ;DOI: 10.1257/aer.103.1.220 ;CODEN: AENRAA

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Title:
Are Consumers Myopic? Evidence from New and Used Car Purchases
Author: Busse, Meghan R. ; Knittel, Christopher R. ; Zettelmeyer, Florian
Subjects: Automobile prices ; Automobile sales ; Automobiles ; Coefficients ; Consumer behavior ; Consumer prices ; Discount rates ; Economic equilibrium ; Economic models ; Economic statistics ; Economic theory ; Elasticity of demand ; Emissions ; Energy market ; Fuel efficiency ; Fuels ; Gasoline ; Gasoline prices ; Interest rates ; Market share ; Petrol ; Studies ; Willingness to pay
Is Part Of: The American economic review, 2013-02, Vol.103 (1), p.220-256
Description: We investigate whether car buyers are myopic about future fuel costs. We estimate the effect of gasoline prices on short-run equilibrium prices of cars of different fuel economies. We then compare the implied changes in willingness-to-pay to the associated changes in expected future gasoline costs for cars of different fuel economies in order to calculate implicit discount rates. Using different assumptions about annual mileage, survival rates, and demand elasticities, we calculate a range of implicit discount rates similar to the range of interest rates paid by car buyers who borrow. We interpret this as showing little evidence of consumer myopia.
Publisher: Nashville: American Economic Association
Language: English
Identifier: ISSN: 0002-8282
EISSN: 1944-7981
DOI: 10.1257/aer.103.1.220
CODEN: AENRAA
Source: AUTh Library subscriptions: ProQuest Central

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Are Consumers Myopic? Evidence from New and Used Car Purchases

Copyright© 2013 The American Economic Association ;Copyright American Economic Association Feb 2013 ;ISSN: 0002-8282 ;EISSN: 1944-7981 ;DOI: 10.1257/aer.103.1.220 ;CODEN: AENRAA

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