Anastasia Leontiou

“Tacit bundling” among rivals: Limited availability bargains for loss-averse consumers  with N. Ziros

European Economic Review (2024) Vol. 165, 104726.

Abstract: This paper derives a stochastic discount strategy that encourages the joint consumption of two partial-substitute goods. The seller of the less valuable product offers a limited-availability discount to consumers with reference-dependent preferences à la Kőszegi and Rabin (2006). The stochastic discount introduces uncertainty in the consumers’ outcomes and increases their willingness to pay. Due to market competition, such stochastic pricing is effective only when it induces consumers to purchase both products. The other seller, who can only use deterministic pricing, tacitly consents as he has no benefit from engaging in a price war. Thus, a collusive outcome – which harms consumer welfare – is achieved without any explicit coordination between the two sellers. 

Bandwagons in Costly Elections: The Role of Loss Aversion  with G. Manalis and D. Xefteris

Journal of Economic Behavior and Organization (2023) Vol. 209, 471-490. 

Abstract: Under standard assumptions, costly voting models predict that the supporters of the underdog –i.e., of the candidate that is expected to lose– are less likely to abstain than the supporters of the expected winner (Palfrey and Rosenthal, 1985; Herrera et al., 2014). While some empirical/experimental studies identify this underdog effect (Levine and Palfrey, 2007), in others bandwagons emerge: the supporters of the expected winner are found to abstain less often than the supporters of the underdog (Agranov et al., 2018). We focus on large elections and follow ‎‎Kőszegi and Rabin (2006, 2007) by considering that voters experience gains and losses with respect to their expected equilibrium payoffs. When the election is sufficiently close (i.e., when the shares of the supporters of the two alternatives are not too asymmetric), we find that bandwagons emerge in every equilibrium. To our knowledge, this is the first formal study that explains bandwagons in large elections, by incorporating a commonly accepted behavioural model in an otherwise standard context of costly voting. 

Loss-leading in vertical markets: The role of consumers' loss aversion with F. Antoniou.