How Freemium Gets Consumers to Pay a Premium: The Role of Loss-Aversion

@article{Mishra2017HowFG,
  title={How Freemium Gets Consumers to Pay a Premium: The Role of Loss-Aversion},
  author={Nishant Mishra and Sajjad Najafi and Sami Najafi Asadolahi and Andy A. Tsay},
  journal={Computing Technologies eJournal},
  year={2017}
}
  • Nishant Mishra, Sajjad Najafi, +1 author Andy A. Tsay
  • Published 2017
  • Business
  • Computing Technologies eJournal
  • We consider the optimal pricing of a freemium product offered by a firm to consumers who are loss-averse with stochastic and endogenous reference points, and the role of the consumers' surprise on their purchase decision about the premium version, after experiencing the free version. We formulate the problem as a multistage Stackelberg game and investigate its equilibrium by determining the consumers' optimal purchase plan, the firm's optimal price to charge for the premium version, and the… CONTINUE READING

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