Essays on dynamics of consumer choice
Dorabialski, Wojciech Janusz
Doctor of Philosophy
This dissertation consists of two essays. The first essay is a theoretical study of a dynamic game played between the consumers and a monopolistic seller who can use checkout coupons. The paper shows how checkout coupons can increase the profit of a monopolist, when both the seller and the consumers have private information. Double-sided uncertainty is necessary for the profitability of checkout coupons, but does not guarantee it. Increase in profit comes at a loss of efficiency: the quantity sold decreases. The second essay is an empirical study of the causes and consequences of current trends in the market for passenger vehicles. During the last 30 years, light trucks have become an increasingly popular substitute for a passenger car. The sales and the share of light trucks in the US vehicle fleet has been increasing. We use accident data to show that light trucks are safer than cars, and that the safety advantage increases with their share in the vehicle fleet. We show that this may be the force that drives the popularity of light trucks. Unfortunately, light trucks impose a significant safety externality on other road users. This external cost is greater than the safety benefit to light truck occupants. We estimate that 2086 fatalities could be avoided during the year 1999 if the share of light trucks was lowered to the level that prevailed in the year 1970.