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| Author: | Purohit, D. |
| Title: | Playing the role of buyer and seller: the mental accounting of tradeins |
| Journal: | Marketing Letters
1995 : APR, VOL. 6:2, p. 101-110 |
| Index terms: | CONSUMER DURABLES TRADE ACCOUNTING |
| Language: | eng |
| Abstract: | This paper examines the role of trade-ins in consumers' purchases of new durable goods. The authors argue that even if the net price paid by consumers who trade in an old product remains the same, varying the offer on the trade-in substantially affects consumers' satisfaction with the transaction. In particular, because the product is a part of their endowment, consumers' valuation of their used product can be more than the market's valuation. The author uses the notion of mental accounting and endowment effects to develop a model of trade-ins. |
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