Consumer Decisions on Durable Products

Project summary

Project A05 examines distorted decisions of consumers in the automotive industry. Consumers may exhibit multiple behavioral biases when buying a car, e.g., biased expectations about their future behavior or about savings from using car-sharing services. Overconfidence and ambiguity aversion might affect consumers’ choices for alternative fuel efficiency technologies and for flat-rate (owning) vs. pay-per-use consumption. Framing (e.g., pertaining to information and choice-elicitation interfaces) possibly influences the direction and the degree of these biases. The results will help policy makers design effective regulations to mitigate biases and promote normative goals such as reducing CO2 emissions.