Title: Selling in Advance to Loss Averse Consumers
This paper considers the influence of consumer loss aversion on firm conduct and market performance in settings with an advance purchase option. Examples include ticketing markets (transportation, entertainment, accomodation) and new, to-be-released, products or technologies. We show that loss aversion acts anti-competitively on prices but pro-competitively on advance purchase discounts. Loss aversion changes our assessment of policies aiming to improve consumers' information at the advance purchase stage. Accounting for loss aversion reveals that under monopoly (competition) informing consumers has the negative (positive) effect of increasing (decreasing) the number of uninformed advance purchases.