10-1-2011 Consumer Biases and Mutual Ownership

  title={10-1-2011 Consumer Biases and Mutual Ownership},
  author={Ryan John Bubb},
We show how ownership of the firm by its customers, as well as nonprofit status, can prevent firms from using contractual terms that take advantage of consumer biases. By eliminating an outside residual claimant with control over the firm, these alternatives to investor ownership reduce the incentive of the firm to offer such terms. However, customers who are unaware of their behavioral biases may fail to recognize this advantage of non-investor-owned firms. We present evidence from the… CONTINUE READING


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