Microeconomics 2nd Edition by Douglas Bernheim

Exercise 4

Application 13.4 (on health clubs) shows how a business can make a profit by taking advantage of customers' dynamic inconsistency. Why do health club members allow health clubs to take advantage of them What else might they do Can you think of other examples of profitable business strategies (either actual or potential) designed to take advantage of the behavioral patterns discussed in this chapter For example, do businesses sometimes try to exploit the endowment effect The anchoring effect How Think about advertising and marketing strategies, among other things.