Template-Type: ReDIF-Paper 1.0
Title: Model-Based Evaluation of Cooling-off Policies
Author-Name: Christian Michel
Author-Email: christian.michel@upf.edu 
Author-Name: André Stenzel
Author-Email: andre.stenzel@uni-mannheim.de
Classification-JEL: D04, D18, D90
Keywords: Cooling-off, Equilibrium-based Inference, Identification of nonstandard preferences, Projection bias, Behavioral economics

Abstract: This paper studies the ex-ante prediction and ex-post evaluation of the effects of
cooling-off policies when consumers may exhibit a behavioral projection bias. We
first set up a theoretical model and show that neither the adoption of a mandatory
cooling-off period nor a return policy is generically superior or consumer welfare
improving. Relating the model’s pre- and post-policy equilibrium combinations to
their empirical analogues, we then show how market-level data can help to evaluate
policies using baseline statistics and to sometimes even conclude whether consumers
exhibit a projection bias. We further discuss the applicability to other policies and
nonstandard preferences and the implications for policy design.

Note: 
Length: 49
Creation-Date: 2018-11
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp061
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2018_061v2