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Bait and Switch

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  • Lazear, Edward P

Abstract

Sellers sometimes practice a form of false advertising known as bait and switch. A low-priced good is advertised but replaced by a different good at the showroom. The practice is surprising since advertising the wrong good discourages the appropriate buyers from shopping, attracting customers who will be disappointed when they see the good. Firms bait and switch to draw a greater number of shoppers. The cost is that some who would have bought the good that is for sale may not bother to look. Under a variety of conditions, bait and switch is a profitable strategy resulting in a fully rational equilibrium with false advertising. Copyright 1995 by University of Chicago Press.

Suggested Citation

  • Lazear, Edward P, 1995. "Bait and Switch," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 813-830, August.
    • Handle: RePEc:ucp:jpolec:v:103:y:1995:i:4:p:813-30
    DOI: 10.1086/262004
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    References listed on IDEAS

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    1. Carlton, Dennis W, 1986. "The Rigidity of Prices," American Economic Review, American Economic Association, vol. 76(4), pages 637-658, September.
    2. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
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    Cited by:

    1. Glenn Ellison, 2005. "A Model of Add-On Pricing," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(2), pages 585-637.
    2. Florian Baumann & Alexander Rasch, 2020. "Exposing false advertising," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(3), pages 1211-1245, August.
    3. Antonio Rosato, 2016. "Selling substitute goods to loss-averse consumers: limited availability, bargains, and rip-offs," RAND Journal of Economics, RAND Corporation, vol. 47(3), pages 709-733, August.
    4. Florian Morath & Johannes Münster, 2018. "Online Shopping and Platform Design with Ex Ante Registration Requirements," Management Science, INFORMS, vol. 64(1), pages 360-380, January.
    5. Sandro Ambuehl, 2017. "An Offer You Can't Refuse? Testing Undue Inducement," CESifo Working Paper Series 6296, CESifo.
    6. Xavier Gabaix & David Laibson, 2018. "Shrouded attributes, consumer myopia and information suppression in competitive markets," Chapters, in: Victor J. Tremblay & Elizabeth Schroeder & Carol Horton Tremblay (ed.), Handbook of Behavioral Industrial Organization, chapter 3, pages 40-74, Edward Elgar Publishing.
    7. Baumann, Florian & Rasch, Alexander, 2017. "Injunctions against false advertising," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168142, Verein für Socialpolitik / German Economic Association.
    8. John Ashton & Andros Gregoriou, 2014. "The role of implicit costs and product quality in determining the customer costs of using personal current accounts," Working Papers 14001, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
    9. Aldo Pignataro, 2019. "The effects of loss aversion on deceptive advertising policies," Theory and Decision, Springer, vol. 87(4), pages 451-472, November.
    10. Luis Cabral, 2007. "Lock in and Switch: Asymmetric Information and New Product Diffusion," Working Papers 07-10, New York University, Leonard N. Stern School of Business, Department of Economics.
    11. Fabian Herweg & Antonio Rosato, 2020. "Bait and ditch: Consumer naïveté and salesforce incentives," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(1), pages 97-121, January.
    12. Luís Cabral, 2012. "Lock in and switch: Asymmetric information and new product diffusion," Quantitative Marketing and Economics (QME), Springer, vol. 10(3), pages 375-392, September.
    13. Matthew Jones & Bruce Kobayashi & Jason O’Connor, 2018. "Economics at the FTC: Non-price Merger Effects and Deceptive Automobile Ads," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 53(4), pages 593-614, December.
    14. Morley Gunderson, 2010. "Edward P. Lazear," Chapters, in: Ross B. Emmett (ed.), The Elgar Companion to the Chicago School of Economics, chapter 8, Edward Elgar Publishing.

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