Timid choices and bold forecasts: a cognitive perspective on risk taking
Management Science
The Effects of Cross-Ruff Coupons on Sales and Profits
Management Science
Coordinating Channels Under Price and Nonprice Competition
Marketing Science
Reward Programs and Tacit Collusion
Marketing Science
Competitive One-to-One Promotions
Management Science
Contingent Pricing to Reduce Price Risks
Marketing Science
Slippage in Rebate Programs and Present-Biased Preferences
Marketing Science
Optimizing merchant revenue with rebates
Proceedings of the fourth ACM international conference on Web search and data mining
Competitive Behavior-Based Price Discrimination for Software Upgrades
Information Systems Research
A generalized model of partial resale
Decision Support Systems
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This paper examines a key difference between two promotional vehicles, coupons and rebates. Whereas coupons offer deals up front, with the purchase of the product, rebates can be redeemed only after purchase. When consumers experience uncertain redemption costs, this difference translates to a difference in when uncertainty is resolved. With coupons the uncertainty is resolved before purchase; with rebates the uncertainty is resolved after purchase. As a result, we show that rebates are more efficient in surplus extraction but coupons offer more finetuned control over whom to serve. We identify the conditions under which each is optimal, and these conditions turn on the gap between “low” reservation price consumers' valuations and their highest redemption costs. Rebates are optimal when this gap is large; coupons tend to be optimal otherwise. Risk aversity on the part of consumers reduces the attractiveness of rebates, as does the delay between rebate redemption and rebate payment, but the latter if and only if consumers are more impatient than the seller. These observations match up well with what we know about the use of these promotional vehicles in the real world.