  In the context of nonlinear prices, the empirical evidence suggests that the
consumers have cognitive biases represented in a limited understanding of
nonlinear price structures, and they respond to some alternative perceptions of
the marginal prices. In particular, consumers usually make choices based more
on the average than the marginal prices, which can result in a suboptimal
behavior. Taking the misspecification in the marginal price as exogenous, this
document analyzes how is the optimal quadratic price scheme for a monopolist
and the optimal quadratic price scheme that maximizes welfare when there is a
continuum of representative consumers with an arbitrary perception of the
marginal price. Under simple preferences and costs functional forms and very
straightforward hypotheses, the results suggest that the bias in the marginal
price doesn't affect the maximum welfare attainable with quadratic price
schemes, and it has a negligible effect over the efficiency cost caused by the
monopolist, so the misspecification in the marginal price is not relevant for
welfare increasing policies. However, almost always the misspecification in the
marginal price is beneficial for the monopolist. An interesting result is that
under these functional forms, more misspecification in the marginal price is
beneficial for both the consumers and the monopolist if the level of bias is
low, so not always is socially optima to have educated consumers about the real
marginal price. Finally, the document shows that the bias in the marginal price
has a negative effect on reduction of aggregate consumption using two-tier
increasing tariffs, which are commonly used for reduction of aggregate
consumption.
