<?xml version="1.0" encoding="UTF-8"?><xml><records><record><source-app name="Biblio" version="7.x">Drupal-Biblio</source-app><ref-type>17</ref-type><contributors><authors><author><style face="normal" font="default" size="100%">Alexander Morell</style></author><author><style face="normal" font="default" size="100%">Andreas Glöckner</style></author><author><style face="normal" font="default" size="100%">Emanuel V. Towfigh</style></author></authors></contributors><titles><title><style face="normal" font="default" size="100%">Sticky Rebates: Target Rebates Induce Non-Rational Loyalty in Consumers</style></title></titles><dates><year><style  face="normal" font="default" size="100%">2009</style></year></dates><urls><web-urls><url><style face="normal" font="default" size="100%">https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1443783</style></url></web-urls></urls><language><style face="normal" font="default" size="100%">eng</style></language><abstract><style face="normal" font="default" size="100%">&lt;p&gt;Competition policy often relies on the assumption of a rational consumer, although other&lt;br /&gt;
models may better account for people&amp;rsquo;s decision behavior. In three experiments, we&lt;br /&gt;
investigate the influence of loyalty rebates on consumers based on the alternative Cumulative&lt;br /&gt;
Prospect Theory (CPT), both theoretically and experimentally. CPT predicts that loyalty&lt;br /&gt;
rebates could harm consumers by impeding rational switching from an incumbent to an&lt;br /&gt;
outside option (e.g., a market entrant). In a repeated trading task, participants decided whether&lt;br /&gt;
or not to enter a loyalty rebate scheme and to continue buying within that scheme. Meeting&lt;br /&gt;
the condition triggering the rebate was uncertain. Loyalty rebates considerably reduced the&lt;br /&gt;
likelihood that participants switched to a higher-payoff outside option later. We conclude that&lt;br /&gt;
loyalty rebates may inflict substantial harm on consumers and may have an underestimated&lt;br /&gt;
potential to foreclose consumer markets. Our findings therefore provide additional arguments&lt;br /&gt;
why a dominant firm using target rebates may monopolize a market or abuse its market&lt;br /&gt;
power. They also provide arguments why target rebates may raise consumer protection&lt;br /&gt;
concerns.&lt;/p&gt;
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