Consumer Preferences, Consumer Mistakes, and Firms’ Response

“Consumer Preferences, Consumer Mistakes, and Firms’ Response” is name of the research group, generously funded by the German Research Foundation (DFG) and the Austrian Science Fund (FWF), whose annual workshop was hosted by Frankfurt School on 4 and 5 September 2024.

The event was organised by Frankfurt School professors Andreas Grunewald, Heiko Karle, and Markus Reisinger. It brought together senior researchers and young talents in behavioral economics, featuring presentations from notable external speakers from the US including Keith Ericson (Boston University) and Nina Buchmann (Yale) as well as Achim Wambach the president of the research institute ZEW at Mannheim. Further speakers included Paul Heidhues (Düsseldorf Institute for Competition Economics (DICE), Heinrich-Heine-Universität Düsseldorf), Hannah Schildberg-Hörisch (DICE), and Marta Kozakiewicz (Frankfurt School).

The workshop covered a range of topics including paternalistic discrimination and regulation in economics with limited consumer attention. It provided a platform for exchanging innovative ideas and fostering collaborations, emphasising the importance of understanding consumer behavior and its implications for firms and markets.

The research group“Consumer Preferences, Consumer Mistakes, and Firms‘ Response“, which is funded by DFG and FWF with several million euros, has been officially set-up in December 2022. The group consists of twelve members including three Frankfurt School professors –  Andreas Grunewald, Heiko Karle and Markus Reisinger.

Corporate strategies that make use of consumers’ mistakes for profit growth are a key research topic. Examples are complex or opaque procedures to terminate contracts or consciously holding back product information. Furthermore, the researchers want to examine if and to which extent regulation can effectively prevent the implementation of such strategies. Frankfurt School professors will analyse corporate strategies of huge digital platforms. They will also address how companies increase their profits when their clients are careless. Many consumers, for example, tend to not terminate long-term contracts and thereby miss opportunities to save (for example utilities, energy, telecommunication). The professors want to learn which forces matter in this context.