Buy It Now, or Later, or Not: Loss Aversion in Advance Purchasing
This paper studies the advance$-$purchase problem when a consumer has reference$-$dependent preferences in the form of Koszegi and Rabin (2009), in which planning affects reference formation. When the consumer exhibits plan revisability, loss aversion increases the price at which she is willing to pre$-$purchase. This implies that loss aversion can lead to the selection of a riskier option in certain situations. Moreover, I endogenize the seller$'$s price-commitment behavior in the advance$-$purchase problem. The result shows that the seller commits to his spot price even though he is not obliged to, which was treated as a given assumption in previous literature.