bidding behavior in descending and ascending auctions this research examines how individual differences and institutional practices influence consumer bidding in auctions bidders may be motivated by different goals e g thrill of winning the item with minimal attention to what they pay for it versus prudence winning the item at a price at or below its perceived value also innate or auctioneer induced differences may exist in the precision and salience of bidder cognitions about the item s value we report two studies on how these motivational and cognitive factors influence bids in descending and ascending auctions respectively each study also manipulated a situational variable wait time at each price step the two auctions realized different average prices for the same item set average bids were higher in the descending versus ascending auction in several study conditions in both auction formats bidders primed with thrill versus prudence bid higher but more precise and or salient values attenuated this goal effect among other results in the descending auction longer wait times elicited higher bids from bidders primed with thrill but not prudence in the ascending auction longer wait times produced lower bids for bidders primed with prudence but not thrill these findings on consumer bidding behavior have practical implications for auction design

comparing alternative models of heterogeneity in consumer choice behavior summary when modeling demand for differentiated products it is vital to adequately capture consumer taste heterogeneity but there is no clearly preferred approach here we compare the performance of six alternative models currently the most popular are mixed logit mixl particularly the version with normal mixing n mixl and latent class lc which assumes discrete consumer types recently several alternative models have been developed the generalized multinomial logit g mnl extends n mixl by allowing for heterogeneity in the logit scale coefficient scale heterogeneity logit s mnl is a special case of g mnl with scale heterogeneity only the mixed mixed logit mm mnl assumes a discrete mixture of normals heterogeneity distribution finally one can modify n mixl by imposing theoretical sign constraints on vertical attributes we call this t mixl we find that none of these models dominates the others but g mnl mm mnl and t mixl typically outperform the popular n mixl and lc models copyright 2012 john wiley sons ltd

loss aversion and price volatility as determinants of attitude towards and preference for variable price in the swedish electricity market the results of a survey of a random sample of 488 swedish residents showed that a positive attitude towards and preference for a variable price agreement with the incumbent electricity supplier was negatively affected by loss aversion and a positive attitude also negatively affected by beliefs about price volatility although correlated with attitude and preference age education and current choice of a variable price agreement had no independent effects income and current electricity costs had no effects

a three way equivalence abstract in view of the well known core equivalence results in atomless economies coincidence of market game equilibrium allocations with competitive allocations is tantamount to a three way equivalence between market game mechanisms competitive equilibria and the core based on this idea we study equilibrium refinements of market games which allow us to use the core equivalence machinery in order to provide an exact market game characterization of competitive equilibria

noncooperative oligopoly in markets with a continuum of traders and a strongly connected set of commodities we show the existence of a cournot nash equilibrium for a mixed version of the shapley window model where large traders are represented as atoms and small traders are represented by an atomless part previous existence theorems for the shapley window model provided by sahi and yao 1989 in the case of economies with a finite number of traders and by busetto et al 2011 in the case of mixed exchange economies are essentially based on the assumption that there are at least two atoms with strictly positive endowments and indifference curves contained in the strict interior of the commodity space our result does not require this restriction it relies on the characteristics of the atomless part of the economy and exploits the fact that traders belonging to the atomless part have an endogenous walrasian behavior

using extremeness aversion to fight obesity policy implications of context dependent demand this article illustrates how the compromise effect alters consumers selection of soft drinks using three within subject studies we show that extremeness aversion and price insensitivity cause consumers to increase their consumption when the smallest drink size is dropped or when a larger drink size is added to a set as a result rational firms find it best to drop the smaller sizes and add a larger size thus increasing overall consumption after estimating each individual s demand as a function of price and drink size availability policy experiments demonstrate how it is possible to reduce soft drink consumption without additional taxation

comparative statics in a simple class of strategic market games this paper investigates the effects of entry in two sided markets where buyers and sellers act strategically applying new tools from supermodular optimization games sufficient conditions for different comparative statics results are obtained while normality of one good is sufficient for the equilibrium price to be increasing in the number of buyers normality of both goods is required for equilibrium bids and sellers equilibrium utilities to be increasing in the number of buyers when the economy is replicated normality of both goods and gross substitutes guarantee that the equilibrium of the strategic market game converges monotonically in quantities to the competitive equilibrium simple counter examples are provided to settle other potential conjectures of interest c 2007 elsevier inc all rights reserved

trade fragmentation and coordination in strategic market games abstract this paper analyzes the incentives to trade and the validity of the law of one price in three strategic market games with multiple trading posts in bilateral oligopolies where traders have corner endowments in one commodity all agents participate in all the markets the law of one price holds in bilateral oligopolies and in the buy or sell market game where equilibrium strategies are locally unique when traders can simultaneously buy and sell on every market the law of one price fails and the set of equilibrium prices generically has the same dimension as the number of active markets journal of economic literature classification numbers d43 d51

the effects of effort and intrinsic motivation on risky choice people often need to trade off between the probability and magnitude of the rewards that they could earn for investing effort the present paper proposes that the conjunction of two simple assumptions relating effort induced reward expectations to prospect theory s value function provides a parsimonious theory that predicts that the nature of the required effort will have a systematic effect on such trade offs using the case of frequency or loyalty programs a series of five studies involving both real and hypothetical choices demonstrated that a the presence as opposed to absence of effort requirements enhances the preference for sure small rewards over large uncertain rewards b the preference for reward certainty is attenuated when the effort activity is intrinsically motivating and c continuously increasing the effort level leads to an inverted u effect on the preference for sure small over largeuncertain rewards the studies also employ process measures and examine the mechanisms underlying the impact of the effort stream on the trade off between the certainty and magnitude of rewards the final section discusses the theoretical implications of this research as well as the practical implications with respect to frequency programs and other types of incentive systems

what to say when influencing consumer choice by delaying the presentation of favorable information delaying the presentation of some favorable information about an alternative e g a product service brand store or cause until after consumers have completed their pre choice screening can increase that alternative s choice share while such a delay reduces the alternative s chance of surviving the screening it can actually increase its probability of ultimately being chosen evidence from five experiments demonstrates this preference enhancing effect of the delayed presentation of favorable information and it illustrates the underlying preference dynamics across decision stages associated with such a delay the findings also indicate that this preference enhancing effect is driven by a combination of two mental mechanisms a shift in the decision weights of attribute dimensions rendering dimensions on which a delay occurs more influential across all alternatives and an overall preference boost for the alternative about which information is delayed

overchoice and assortment type when and why variety backfires almost universally research and practice suggest that a brand that increases its product assortment or variety should benefit through increased market share in this paper we show this is not always the case we introduce the construct assortment type and demonstrate that the effect of assortment size on brand share is systematically moderated by assortment type we define an alignable assortment as a set of brand variants that differ along a single compensatory dimension such that choosing from that assortment only requires within attribute trade offs in contrast we define a nonalignable assortment as a set of brand variants that simultaneously vary along multiple noncompensatory dimensions demanding between attribute trade offs in turn we argue that an alignable assortment can efficiently meet the diverse tastes of consumers thereby increasing brand share but that a nonalignable assortment increases both the cognitive effort and the potential for regret faced by a consumer thereby decreasing brand share we term this effect overchoice across three studies we provide evidence of overchoice and tie the effect to the effort and regret brought about by nonalignability in the process we demonstrate that simplification of information presentation reversibility of choice and a reduction in underlying nonalignability serve to reduce or eliminate this effect

on the recoverability of choice behaviors with random coefficients choice models in the context of limited data and unobserved effects random coefficients choice models are seeing widespread adoption in marketing research partly because of their ability to generate household level parameter estimates with limited data however the power of such models may tempt researchers to trust that they continue to produce reasonable estimates when in fact either model misspecification or insufficient data limits the models ability to recover household level parameters successfully if household level choice behaviors are not recovered successfully managerial decisions such as marketing mix planning and targeting direct marketing segmentation and forecasting may not produce the desired results this study addresses the following questions first can random coefficients choice models correctly identify markets characterized by preference and response heterogeneity state dependence the use of alternative decision heuristics that result in reduced choice sets and combinations of these effects if so how much data is required and is this realistic given the size of data sets typically used in marketing analyses which model selection criteria should be used to identify these markets when there is spurious market identification which parameters contribute to the spurious result an extensive simulation experiment is conducted wherein random coefficients logit models with varying specifications of parameter heterogeneity state dependence effects and choice set heterogeneity are applied to 128 experimental conditions the results show which types of markets can be identified reliably and which cannot based on the results of the simulation the authors develop a model selection heuristic that identifies the correct market in 81 of the experimental conditions in contrast strict application of the best model selection criterion alone results in correct market identification in at most 34 of experimental conditions interestingly we find that the amount of data number of households or number of purchases per household does not affect our ability to identify the correct market type with this heuristic so there is a good chance of identifying the correct market type even when little data is available

managerial metric use in marketing decisions across 16 countries a cultural perspective research on metrics is consistently designated a priority by academics and practitioners however less is known about how culture and cross national differences can potentially impact metric use which is theoretically and managerially limiting this work develops a model that examines national and organizational cultural antecedents while controlling for the decision setting testing the model on data collected from 4384 managerial decisions from 1637 firms in 16 countries reveals that both levels of culture are associated with metric use but each has varying effects our results enable multinational executives to better understand and increase managerial metric use across different cultures and settings

stable trading structures in bilateral oligopolies abstract this paper analyzes the formation of trading groups in a bilateral market where agents trade according to a shapley shubik j polit econ 85 1977 937 968 trading mechanism the only strongly stable trading structure is the grand coalition where all agents trade on the same market other weakly stable trading structures exist and are characterized by an ordering property trading groups can be ranked by size and cannot contain very different numbers of traders of the two types journal of economic literatureclassification numbers d43 d51

decision making under uncertainty capturing dynamic brand choice processes in turbulent consumer goods markets we construct two models of the behavior of consumers in an environment where there is uncertainty about brand attributes in our models both usage experience and advertising exposure give consumers noisy signals about brand attributes consumers use these signals to update their expectations of brand attributes in a bayesian manner the two models are 1 a dynamic model with immediate utility maximization and 2 a dynamic forward looking model in which consumers maximize the expected present value of utility over a planning horizon given this theoretical framework we derive from the bayesian learning framework how brand choice probabilities depend on past usage experience and advertising exposures we then form likelihood functions for the models and estimate them on nielsen scanner data for detergent we find that the functional forms for experience and advertising effects that we derive from the bayesian learning framework fit the data very well relative to flexible ad hoc functional forms such as exponential smoothing and also perform better at out of sample prediction another finding is that in the context of consumer learning of product attributes although the forward looking model fits the data statistically better at conventional significance levels both models produce similar parameter estimates and policy implications our estimates indicate that consumers are risk averse with respect to variation in brand attributes which discourages them from buying unfamiliar brands using the estimated behavioral models we perform various scenario evaluations to find how changes in marketing strategy affect brand choice both in the short and long run a key finding obtained from the policy experiments is that advertising intensity has only weak short run effects but a strong cumulative effect in the long run the substantive content of the paper is potentially of interest to academics in marketing economics and decision sciences as well as product managers marketing research managers and analysts interested in studying the effectiveness of marketing mix strategies our paper will be of particular interest to those interested in the long run effects of advertising note that our estimation strategy requires us to specify explicit behavioral models of consumer choice behavior derive the implied relationships among choice probabilities past purchases and marketing mix variables and then estimate the behavioral parameters of each model such an estimation strategy is referred to as structural estimation and econometric models that are based explicitly on the consumer s maximization problem and whose parameters are parameters of the consumers utility functions or of their constraints are referred to as structural models a key benefit of the structural approach is its potential usefulness for policy evaluation the parameters of structural models are invariant to policy that is they do not change due to a change in the policy in contrast the parameters of reduced form brand choice models are in general functions of marketing strategy variables e g consumer response to price may depend on pricing policy as a result the predictions of reduced form models for the outcomes of policy experiments may be unreliable because in making the prediction one must assume that the model parameters are unaffected by the policy change since the agents in our models choose among many alternative brands their choice probabilities take the form of higher order integrals we employ monte carlo methods to approximate these integrals and estimate our models using simulated maximum likelihood estimation of the dynamic forward looking model also requires that a dynamic programming problem be solved in order to form the likelihood function for this we use a new approximation method based on simulation and interpolation techniques these estimation techniques may be of interest to researchers and policy makers in many fields where dynamic choice among discrete alternatives is important such as marketing decision sciences labor and health economics and industrial organization

the quality double whammy this research focuses on how consumers perceive the quality level of a complex stimulus in our case a service encounter and how this perception affects consumers overall assessment of the quality level of the firm as such it should be of interest to consumer behavior theorists as well as to those involved in marketing management issues we start our presentation by developing a normative bayesian data integration and updating model somewhat similar to that put forth by rust et al 1999 the major constructs of interest in this model are the person s belief about the overall service quality level of a firm and what will happen on the next service encounter two major results following from this baseline normative model are that the updated means of these two beliefs are identical to the dynamic updating equations put forth by boulding et al 1993 and that an underlying assumption of this model is that consumers form unbiased perceptions of the complex stimulus next based on substantial empirical evidence from the behavioral literature we incorporate into this baseline model a process by which consumers form nonrandom perceptions specifically we postulate that a person s perception of a complex service encounter is a blend of the objective dimensions of the service encounter and the person s prior overall belief about the quality level of the firm the relative weights placed on these two factors are determined at least in part by the experience level of the customer and the complexity of the service encounter we then use this expanded model to compare and test different models of service quality and provide deeper insights into the process by which consumers form perceptions of both the service transaction and the overall service quality level of a firm we test this model using data from two different experiments in each experiment we manipulate the service provided and the person s initial will and should expectations using both obtrusive and unobtrusive measures of the underlying constructs of our model we employ multiple tests to determine the veracity of our expanded model relative to the baseline model these tests support the expanded model specification as found previously and as predicted by a bayesian updating process consumers prior beliefs influence their cumulative overall opinion of service quality e g anderson and sullivan 1993 bolton and drew 1991 boulding et al 1993 rust et al 1999 perhaps more importantly these prior beliefs also influence their perceptions of the data themselves which in turn affect their new updated overall opinion these two different influences of prior beliefs on cumulative evaluations of quality constitute the double whammy referred to in the title this double whammy effect has major managerial significance specifically we see from our model development that all activities of a firm will be perceived in light of a person s prior beliefs and that these priors will be double counted relative to our baseline model thus any marketing action taken by a firm will be perceived more positively or negatively depending on the person s prior belief about the quality level of the firm as such our model provides a formal explanation for the notion of brand equity as differential leverage in marketing activities as proposed by keller 1993

when more seems like less differential price framing increases the choice share of higher priced options four experiments supported by six supplemental studies show that premium but higher priced products e g direct flights larger capacity data storage devices are more popular when the additional

wealth warmth and well being whether happiness is relative or absolute depends on whether it is about money acquisition or consumption abstract a central question in consumer and happiness research is whether happiness depends on absolute or relative levels of wealth and consumption to address this question the authors evaluate a finer level than overall happiness and distinguish three specific types of happiness with money with the acquisition of an item and with the consumption of an item they find that happiness with money and with acquisition is relative and that happiness with consumption can be either absolute or relative depending on whether the consumption is inherently evaluable or not including both lab and field data this research yields implications for how to increase consumer happiness from one generation to the next

constructive consumer choice processes consumer decision making has been a focal interest in consumer research and consideration of current marketplace trends e g technological change an information explosion indicates that this topic will continue to be critically important we argue that consumer choice is inherently constructive due to limited processing capacity consumers often do not have well defined existing preferences but construct them using a variety of strategies contingent on task demands after describing constructive choice consumer decision tasks and decision strategies we provide an integrative framework for understanding constructive choice review evidence for constructive consumer choice in light of that framework and identify knowledge gaps that suggest opportunities for additional research

market boundaries and product choice illustrating attraction and substitution effects what happens to the share of choices each item receives when the choice set boundaries are extended by adding a new item that is extremely good on one dimension but poor on the others first there is a substitution effect whereby the new item takes choice share mainly from similar items in the set second there is an attraction effect resulting in a general shift of preference toward the added item experimental studies show that choice patterns conflict with current theoretical and common sense ideas about the effect of added alternatives on choice

estimating heterogeneous eba and economic screening rule choice models consumer choice in surveys and in the marketplace reflects a complex process of screening and evaluating choice alternatives behavioral and economic models of choice processes are difficult to estimate when using stated and revealed preferences because the underlying process is latent this paper introduces bayesian methods for estimating two behavioral models that eliminate alternatives using specific attribute levels the elimination by aspects theory postulates a sequential elimination of alternatives by attribute levels until a single one the chosen alternative remains in the economic screening rule model respondents screen out alternatives with certain attribute levels and then choose from the remaining alternatives using a compensatory function of all the attributes the economic screening rule model gives an economic justification as to why certain attributes are used to screen alternatives a commercial conjoint study is used to illustrate the methods and assess their performance in this data set the economic screening rule model outperforms the eba and other standard choice models and provides comparable results to an equivalent conjunctive screening rule model

efficient timing of communication in multiperiod agencies this paper examines communication in a two period principal agent model in which the agent receives a private signal about the second outcome before the first outcome is realized no communication is compared with communication at three possible dates before the first outcome early at the first outcome consumption date normal and between the initial consumption date and the second outcome delayed delayed communication is shown to have no value if the agent s information is perfect but can have value if it is imperfect early and normal communication can be used to smooth compensation across periods and hence generally have incremental value over delayed communicationif the agent cannot borrow or save however the smoothing benefits disappear if he can borrow and save early and normal communication are equivalent if the agent has domain additive exponential preferences and the private signal is uninformative about the first outcome if the private signal is informative about the first outcome the incremental value of early compared with normal communication attains its maximum for medium informativeness a unifying example is used throughout

prominence versus dominance how relationships between alternatives drive decision strategy and choice this article argues that the structure of a choice set can influence the extent to which consumers weight a given attribute the results of seven experiments suggest that the relationship between options under consideration can influence preference ordering by shifting the decision strategy people adopt when constructing their preference in decisions in which people afford greater importance to one attribute versus another preference for an option that scores high on this prominent attribute may decrease when decoy options that are clearly better or worse than the focal options are inserted into the choice set the authors posit that this effect arises because decision makers initially and spontaneously use dominance cues rather than prominence when evaluating options and they continue to use this strategy even when it does not enable them to differentiate the alternatives under consideration the authors moderate this effect by prompting respondents to consider prominence and by manipulating the ord

the strategic marshallian cross we prove existence and uniqueness of non autarkic equilibria in bilateral oligopoly assuming only that preferences are binormal and satisfy a weakened version of gross substitutes we permit complete heterogeneity of preferences and our analysis exploits the fact that payoffs depend only on own strategy and two universal aggregates this allows us to define strategic versions of supply and demand curves such that non autarkic nash equilibria are in 1 1 correspondence with intersections of these curves the same approach can be used to establish comparative statics under the assumptions above as examples we focus on adding players and changing endowments this competitive approach also allows us to conclude that much of conventional marshallian analysis is robust to strategic manipulation strategic marshallian cross strategic manipulation imperfect competition

atomic cournotian traders may be walrasian in a bilateral oligopoly with large traders represented as atoms and small traders represented by an atomless part when is there a nonempty intersection between the sets of walras and cournot nash allocations using a two commodity version of the shapley window model we show that a necessary and sufficient condition for a cournot nash allocation to be a walras allocation is that all atoms demand a null amount of one of the two commodities we provide four examples which show that this characterization holds non vacuously when our condition fails to hold we also confirm through some examples the result obtained by okuno et al 1980 small traders always have a negligible influence on prices while the large traders keep their strategic power even when their behavior turns out to be walrasian in the cooperative framework considered by gabszewicz and mertens 1971 and shitovitz 1973

thinking outside the packaging box should brands consider store shelf context when eliminating overpackaging governmental policies are encouraging companies to reduce the environmental impact of their packaging and particularly overpackaging which raises a broad range of ethical considerations however experiments comparing an overpackaged product with a non overpackaged product have shown that eliminating overpackaging may have a negative influence on brand image and consumer purchase intention in this paper we draw on attribution theory to examine the influence of the absence vs presence of overpackaging on consumers response depending on their environmental consciousness and the absence vs presence of overpackaging on the competing product an experiment conducted on 218 consumers demonstrates that non overpackaging for a target product only adversely affects purchase intention among non environmentally conscious consumers when competing products are overpackaged these results lead to optimistic recommendations for marketing managers and public policy makers to help them solve the ethical dilemma linked to overpackaging

search costs and adaptive consumers short time delays do not affect choice quality using online price comparison and shopping platforms makes experiencing slow connections lags and waiting times for information an unfortunate reality however little attention has been paid to analyzing the effects of such delayed display of information on product choice behavior this article explores the effect of time delays in a multi attribute choice laboratory experiment by not providing information immediately when requested but after short time delays increasing these waiting times reduced the amount of information looked up but did not affect choice quality higher time delays made decision makers use more deliberate search processes whereas low time delays induced inefficient over searching

bilateral oligopoly the efficiency of intermediate goods markets abstract we show that intermediate goods markets may be efficient despite the presence of commonly accepted signs of market failure such as high concentration both among sellers and buyers sparse trading networks price dispersion and externalities the results are derived in an extensive form model of bilateral bargaining with multiple buyers and multiple sellers and with externalities between the negotiations we also characterize the structure of the endogenous trading network i e how firms choose trading partners prices are dispersed and depend on both the concentration of capital and the concentration of sales consistent with some stylized facts on buyer power

the role of explanations and need for uniqueness in consumer decision making unconventional choices based on reasons this research investigates the interaction between a very common task explaining decisions and an individual difference need for uniqueness nfu on buyer decision making we propose that explaining or providing reasons for decisions shifts the focus from the choice of options to the choice of reasons furthermore buyers who explain their decisions and have high nfu tend to select unconventional reasons and are consequently more likely to make unconventional choices these predictions were supported in a series of studies involving choices between conventional and less conventional options such as whether to switch to a brand on sale whether to select a compromise option and whether to accept a gamble with a possible loss the findings also indicate that the effects of providing reasons are not due to attempts to act rationally or to concerns about being evaluated three boundary conditions on the generalization that high nfu consumers who provide reasons tend to make unconventional choices we

the timing of repeat purchases of consumer durable goods the role of functional bases of consumer attitudes abstract in an attempt to bring consumer psychology theories into research on the timing of repurchase of consumer durables the authors suggest that attitude functions knowledge value expressive social adjustive and utilitarian can help explain and predict interpurchase intervals adopting an interactionist perspective the authors propose that the effect of the attitude functions is contingent on contextual factors which they theorize as the nature of the product along public private and luxury necessity dimensions and the nature of the decision forced or unforced purchase decision hypothesis testing is facilitated by survey data on actual purchase decisions and hazard models that incorporate individual heterogeneity the results support the suggested role of attitude functions in explaining and predicting interpurchase intervals and suggest means by which managers can position their products to shorten interpurchase intervals

who says it s the economy cross national and cross individual variation in the salience of economic performance theories of government approval usually assume that voters care about economic outcomes this assumption frequently does not hold data from the comparative study of electoral systems demonstrate that although the economy is often the most important issue in an election its place on the issue agenda varies across individuals and electoral contexts the economy is more likely to dominate other issue concerns under conditions of economic recession volatility and economic underdevelopment moreover at the individual level the salience of economic performance rises with unemployment and economic vulnerability governance crises related to corruption and human rights reduce attention to the economy as do large scale terrorist attacks if the economy is not perceived as important its effect on government approval is strongly mitigated thus variations in the economy s salience need to be further incorporated into studies linking economic and political outcomes

short term contracts and long term agency relationships abstract long term contracts are valuable only if optimal contracting requires commitment to a plan today that would not otherwise be adopted tomorrow we show that commitments are unnecessary and hence short term contracts are sufficient if 1 all public information can be used in contracting 2 the agent can acess a bank on equal terms with the principal 3 recontracting takes place with common knowledge about technology and preferences and 4 the frontier of expected utility payoffs generated by the set of incentive compatible contracts is downward sloping at all times

the effect of consumers real world choice sets on inferences from stated preference surveys for stated preference sp studies we develop a model that assesses the influence of choice set misspecification arising from the omission of perceived substitutes among real world alternatives in the same class of goods this problem is most likely to be present when individuals are allowed to select a no purchase option instead of being forced to choose from an explicit set of sp alternatives with hypothetical attribute levels a convenient feature of our model is that researchers do not need to know exactly which omitted real substitute the individual most prefers only the set of real substitutes that exists in our empirical illustration a comparison of rival models suggests researchers who overlook the presence of perceived real alternatives related to an sp experiment can end up with noticeably biased welfare estimates our more general model suggests that it may be prudent for future sp researchers to anticipate then test and possibly correct for distortions in utility parameter estimates that result from this problem

strategic complements and substitutes in bilateral oligopolies this note analyzes the effect of product complementarity in a bilateral oligopoly we show that offers of traders on the two sides of the market are strategic complements substitutes if and only if the two goods are substitutes complements the outcome of the bilateral oligopoly game converges monotonically to the competitive equilibrium as the elasticity of substitution between the goods decreases to minus infinite

the role of environmental management in consumers preferences for corporate social responsibility consumers in modern societies are increasingly sensitive to environmental performance by large and small corporations making it a crucial issue in the overall policy of corporate social responsibility the objective of this paper is to study the role of environmental performance in the profile of corporate social responsibility as perceived by consumers we utilize a stated preference approach to the study of consumer s preferences this approach allows for the evaluation in monetary terms of the trade offs that individuals can make between various aspects of corporate policy decisions including the extent of environmental performance the data is modelled by means of a mixture heuristics approach that allows us to study the utilization of various decision rules in the choice of products with various degrees of environmental performance the results show that the linear compensatory heuristic is the most extended across individuals and these subjects value most the policies concerned with environmental management those subjects opting for the non compensatory decision rule tend to focus on the attribute of good labour relations as the most salient factor defining corporate social responsibility in addition policy measures are relatively more valued for some products rather than for others suggesting that consumers discriminate between products when valuing companies environmental profiles

disadvantageous syndicates and stable cartels the case of the nucleolus abstract this paper considers a bilateral market with two complementary commodities and gives a rationale for aumann s paradox the relationship between the notion of strong stability of a syndicate i e the property that no group of players wants to exit or to enter the syndicate and the notion of disadvantageous syndicates is summarized in two results if the two sides of the market are balanced in terms of endowments every syndicate is strongly stable if the two sides of the market are not balanced in terms of endowments then being advantageous in aumann s definition is necessary and sufficient for a syndicate to be strongly stable

preference dynamics in sequential consumer choice with defaults this research examines the impact of defaults on product choice in sequential decision settings whereas prior research has shown that a default can affect what consumers purchase by promoting choi

dynamic price competition with capacity constraints and a strategic buyer we analyze a simple dynamic durable good model two incumbent sellers and potential entrants choose their capacities at the start of the game we solve for equilibrium capacity choices and the necessarily mixed pricing strategies in equilibrium the buyer splits the order with positive probability to preserve competition making it possible that a high and low price seller both have sales sellers command a rent above the value of unmet demand by the other seller a buyer benefits from either a commitment not to make future purchases or by hiring an agent to always buy from the lowest priced seller

measuring consumers willingness to pay at the point of purchase abstract economists psychologists and marketing researchers rely on measures of consumers willingness to pay wtp in estimating demand for private and public goods and in designing optimal price schedules existing market research techniques for measuring wtp differ in whether they provide an incentive to consumers to reveal their true wtp and in whether they simulate actual point of purchase contexts the authors present an empirical comparison of several procedures for eliciting wtp that are applicable directly at the point of purchase in particular the authors test the applicability of becker degroot and marschak s 1964 well known incentive compatible procedure for assessing the utility of lotteries to measuring consumers wtp in three studies the authors explore the reliability validity and feasibility of the procedure and show that it yields lower wtp estimates than do non incentive compatible methods such as open ended and double bounded contingent valuation they show experimentally t

product category familiarity and preference construction marketers often base decisions about marketing strategies on the results of research designed to elicit information about consumers preferences a large body of research indicates however that preferences often are labile that is preferences can be reversed depending on factors such as how the preference is elicited in three studies we examine the effect of familiarity in two preference elicitation tasks choice and matching judgments we provide evidence of an interaction between familiarity and response mode choice or matching in each study in study 3 we test the explanation that preference reversals may occur when the interaction of response mode with product category familiarity leads to systematic changes in attribute weighting

how people respond to contingent valuation questions a verbal protocol analysis of willingness to pay for an environmental regulation abstract this paper investigates what a respondent is thinking when answering a willingness to pay question in a contingent valuation using a think aloud technique from psychology called verbal protocol analysis the willingness to pay responses we observed seem to be constructed from a variety of considerations including an obligation to pay a fair share of the cost of the solution and signaling concern for a larger set of environmental issues the finding that respondents seem to construct their values at the time they are asked rather than reporting a more well defined value is seen as consistent with over two decades of research on the psychology of decision making potential uses of verbal protocols in contingent valuation studies are also discussed

adaptive behavior and economic theory the relationship between psychological and economic views of behavior once a subject of heavy dispute is now understood in a very similar way by practitioners of both these disciplines and of our sister social sciences in general terms we view or model an individual as a collection of decision rules rules that dictate the action to be taken in given situations and a set of preferences used to evaluate the outcomes arising from particular situation action combinations these decision rules are continuously under review and revision new decision rules are tried and tested against experience and rules that produce desirable outcomes supplant those that do not i use the term adaptive to refer to this trial anderror process through which our modes of behavior are determined if one is interested in modeling particular decisions in any very explicit way it is obviously necessary to think about rather narrow aspects of an individual s entire set of decision rules his or her personality experimental psychology has traditionally focused on the adaptive process by which decision rules are replaced by others in this tradition the influence of the subject s or as an economist says the agent s preferences this essay uses a series of examples to illustrate the use of rationality and adaptation in economic theory it is argued that these hypotheses are complementary and that stability theories based on adaptive behavior may help to narrow the class of empirically interesting equilibria in certain economic models an experiment is proposed to test this idea

a rational reconstruction of the compromise effect using market data to infer utilities this article explores the possibility that consumers use market data to make inferences about product utilities the argument is made by means of an example based on the compromise effect found in extant experimental data this phenomenon is generally looked at as a manifestation of deviations from rationality in choice however assuming full rationality i describe a decision rule that is based on consumers inferences about their personal valuation of alternatives from the portfolio of market offerings and some information about their own relative tastes through a number of examples i will argue that consumers often use this or similar decision rules to make inferences about utility i then show that the decision rule may generate compromise effects in experiments and that it may be sustainable the compromise effect could therefore be seen as preliminary evidence that consumers make such inferences

choice based on reasons the case of attraction and compromise effects building on previous research this article proposes that choice behavior under preference uncertainty may be easier to explain by assuming that consumers select the alternative supported by the best reasons this approach provides an explanation for the so called attraction effect and leads to the prediction of a compromise effect consistent with the hypotheses the results indicate that 1 brands tend to gain share when they become compromise alternatives in a choice set 2 attraction and compromise effects tend to be stronger among subjects who expect to justify their decisions to others and 3 selections of dominating and compromise brands are associated with more elaborate and difficult decisions

effects of payment mechanism on spending behavior the role of rehearsal and immediacy of payments past expenses have been shown to influence future spending behavior by depleting available budgets however a prerequisite for this relationship is the accurate recall of past payments and the experiencing of the full aversive impact associated with them this article shows that the use of different payment mechanisms influences both these factors and hence moderates the effects of past payments on future spending specifically past payments strongly reduce purchase intention when the payment mechanism requires the consumer to write down the amount paid rehearsal and when the consumer s wealth is depleted immediately rather than with a delay immediacy two experiments show support for the proposed theoretical framework

dyadic compromise effect existing research on the compromise effect has focused exclusively on the individual this paper investigates compromise effects in a setting that involves multiple individuals making a choice we study whether the dyadic compromise effect dce exists the association between dyadic and individual compromise effects and strategies to mitigate the dce we build a statistical model of dyadic choice that formally incorporates dce we conduct two studies to test our proposed models empirically in study 1 we begin with an investigation of the dce with student subjects in study 2 we test for the presence of dce among married couples when making retirement investment choices in both studies model free and model based evidence provides strong support for the presence of dce a model that incorporates dce provides a better fit than models that do not evidence in support of dce is shown to be robust to alternative compromise effect model specifications and utility aggregation methods we find that the indi

predicting joint choice using individual data choice decisions in the marketplace are often made by a collection of individuals or a group examples include purchase decisions involving families and organizations a particularly unique aspect of a joint choice is that the group s preference is very likely to diverge from preferences of the individuals that constitute the group for a marketing researcher the biggest hurdle in measuring group preference is that it is often infeasible or cost prohibitive to collect data at the group level our objective in this research is to propose a novel methodology to estimate joint preference without the need to collect joint data from the group members our methodology makes use of both stated and inferred preference measures and merges experimental design statistical modeling and utility aggregation theories to capture the psychological processes of preference revision and concession that lead to the joint preference results based on a study involving a cell phone purchase for 214 parent teen dyads demonstrate predictive validity of our proposed method

communication and income smoothing through accounting method choice this paper shows how accounting income smoothing could arise as rational equilibrium behavior i develop a two period agency model in which an agent obtains after the first period s production operation private information regarding future productivity of the operation direct communication of the agent s private signal yields a strict pareto improvement over no communication in this two period world since it allows the agent to achieve signal contingent interperiod consumption smoothing delegation of accounting method choice to the agent is shown to be an alternative pareto equivalent mechanism to direct communication in this paper thus accounting method choice is one way to achieve interperiod signal contingent consumption smoothing by smoothing accounting income one such accounting choice which arises from the structure of the problem is the choice of depreciation method

the self selection of complexity in choice experiments we investigate whether individuals will voluntarily increase the complexity of the tasks they complete within a discrete choice experiment dce we do this via a self selection of complexity design in which respondents choose whether to face choice sets comprising 3 4 or 6 alternatives we link this approach with the emerging excessive choice effect ece literature we find that 30 of the sample opt for the largest sets we test whether this choice of complexity reveals information about respondents capability commitment we find that it does since those with lowest initial error variance levels are most likely to later select the highest level of task complexity we argue that this result offers insights regarding the design of more cognitively efficient dce designs we consider the matching of respondents to the appropriate level of task complexity as analogous to the principal agent problem with asymmetric information rather than trying to understand respondents cognitive capability or commitment ex ante we propose that participants self select designs that achieve the researcher s objective of minimizing error variance copyright 2012 oxford university press

consumer choice strategies for comparing noncomparable alternatives research on consumer choice has focused on easily comparable alternatives a subset of the choices consumers regularly face this paper outlines the problem and two general strategies for comparing noncomparable alternatives a subset of choices that has been overlooked in the literature experiments are reported that support use of the strategies

brand retrieval consideration set composition consumer choice and the pioneering advantage recent research on the pioneering advantage has shown that consumers often prefer pioneering brands to follower brands recent research on consumer choice suggests that information about brands is filtered through a series of sequential cognitive processes this study attempts to integrate these two separate lines of research by investigating the effects of pioneering on each stage of the multistage decision process a within subjects longitudinal experiment was conducted to simulate brand order of entry into a new market we also developed a sequential logit model to isolate the direct impact of pioneering on each stage of the decision process while controlling for indirect effects of pioneering on previous stages the results revealed that the pioneering brand vs followers is more likely to be retrieved considered and selected moreover the results revealed that consumers are more likely to bypass consideration set formation when the choice decision is simple vs complex theoretical and practical implications of the results are discussed

gender differences in e commerce predictors of shopping online were compared for men and women using a sample of 365 college students for the men the only predictor of purchasing products online was the number of hours they spent online for women the predictors of making purchases online included anxiety about using computers and attitudes toward money in addition to the number of hours spent online the results were examined using ols and mle logit and probit regressions techniques and the results from each technique compared and contrasted

environmentally sustainable innovation expected attributes in the purchase of green products in a capitalist economy the principles values and behaviors of a great part of the population are centered on buying things on having goods thus in order to achieve sustainable development emphasis should be given to the creation and the promotion of environmentally sustainable products in view of that the present study investigates consumers purchase decision process regarding environmentally sustainable products this study sought identifying what the green product and process expected attributes are in automobile and furniture purchases as well as what the expanded and reduced risks are in offers with these characteristics to reach these objectives a qualitative research was initially performed and subsequently a quantitative research was carried out with the aim to confirm the mapped data in summary the results obtained indicate as important green attributes for automobiles items such as economy engine and new technologies regarding furniture important green attributes design origin label and origin of the raw material were indicated as important furthermore it could be verified that the purchase of green products may increase performance and time risks and mitigate financial and social risks in short this study allowed for advances in the theoretical comprehension regarding green products and decision making processes with medium and high involvement levels however once external factors such as culture and ethnicity tend to influence buyers decision making processes and considering the fact that this study was executed in brazil distinct results may be found in other countries

anchoring effects on consumers willingness to pay and willingness to accept we examine the susceptibility of consumers willingness to pay wtp and willingness to accept wta judgments to influence by arbitrary anchors the results of four studies suggest that although circumstantial differences between buying and selling decisions can lead to systematic differences in susceptibility to anchoring effects the principles governing the impact of anchoring on wtp and wta judgments are essentially the same in particular robust anchoring effects are observed when the anchor relates to the focal source of uncertainty further wtp and wta judgments are most susceptible to anchoring and endowment effects under uncertainty about the desire to trade the implications of this research for our understanding of anchoring and endowment effects are discussed

analysing decision behaviour in stated preference surveys a consumer psychological approach this paper applies a typology adapted from the consumer psychology literature to a contingent valuation method cvm survey we argue that the typology is helpful as a way of identifying responses that contain useful information on preferences for the environmental good in question relative to those which are unlikely to contain such information applying this framework to a cvm study of agri environmental payments in germany we find that some 90 of responses are preference revealing this distribution changes when the framing of the good is changed the typology may be of most use during the design stage of future cvm studies since it enables researchers to increase the fraction of responses that are useful

price uncertainty and consumer search a structural model of consideration set formation we offer an econometric framework that models consumer s consideration set formation as an outcome of her costly information search behavior because frequently purchased products are characterized by frequent price promotions of varying depths of discounts a consumer faces significant uncertainty about the prices of the brands the consumers engage in a fixed sample search strategy that results in their discovering the posted prices of a subset of the available brands this subset is referred to as the consumer s consideration set the proposed model is estimated using the scanner data set for liquid detergents our key empirical results are i consumers zincur significant search costs to discover the posted prices of the brands ii whereas in store displays and feature ads do not influence consumers quality perceptions of the brands they significantly reduce search costs for observing the prices of the brands iii per capita income of consumer s household significantly increases her search costs and iv the consumers price sensitivity is seriously underestimated if we were to assume that consumers get to know all the posted prices at zero cost the proposed model is also estimated for the ketchup category to enable us to do cross category comparisons of consumers price search behavior

atomic leontievian cournotian traders are always walrasian abstract we consider a bilateral oligopoly version of the shapley window model with large traders represented as atoms and small traders represented by an atomless part for this model we show that when atoms have leontievian utility functions any cournot nash allocation is a walras allocation and consequently it is pareto optimal

the multiperiod principal agent problem in repeated principal agent models long term contracts can improve on short term contracts only if they commit either principal or agent to a payoff in some future circumstance lower than could be obtained from a short term contract negotiated if that circumstance occurs we show that efficient contracting under moral hazard alone does not require long term commitment from the principal provided a short term contract can punish the agent sufficiently in a sense made precise it requires no commitment from the agent either then linking payoffs in one period to outcomes in previous periods does not improve the tradeoff between incentives and risk sharing

information asymmetry participation and long term contracts this paper examines the economic value of participative processes in the setting of long term incentives when informational asymmetries arise between employers supervisors and employees subordinates about future states questions arise as to whether and when resolving these informational asymmetries produces economic gains to address these questions i use a two period principal agent contracting framework in which the agent employee receives imperfect private information about the second period state in the first period and make a welfare comparison between two alternative communication regimes in the delayed communication regime a report from the agent is considered only for second period contract in the early communication regime the report is considered for first period contracting as well this regime can therefore be viewed as encouraging participation in long term contracts i identify conditions under which the early communication regime is strictly preferable to the delayed communication regime further given some additional structure on the agent s preferences this result obtains even if the agent can access capital markets to smooth inter temporal consumption finally i examine the setting in which the principal at the time of contracting has the option of whether or not to install an information system that provides the agent with private information about the future period state i identify conditions under which installing the information system and resolving the consequent information asymmetry through participation is strictly preferable to not installing the information system

the cross price effect on willingness to pay estimates in open ended contingent valuation abstract previous literature has shown that potential buyers use a reference price or product to form their opinion about the value of a new product therefore the pricing decision is an interactive process we investigate the two generalizations of the cross price effect the neighborhood price effect and the asymmetric price effect on consumer willingness to pay wtp for multiple similar products in an open ended contingent valuation context results show that the cross price effect on wtp is prominent with the neighborhood price effect holding in contingent valuation no conclusions are reached about the asymmetric price effect

repeated dichotomous choice formats for elicitation of willingness to pay simultaneous estimation and anchoring effect repeated dichotomous choice contingent valuation data are generated from responses to a succession of binary questions regarding alternative prices for an environmental good in this paper we propose a simultaneous equation model that allows for endogeneity and error correlation across the responses at each stage of the bidding process the model allows us to study the evolution of anchoring effects after the second dichotomous choice question estimation involves the bayesian techniques of gibbs sampling and data augmentation and the application focuses on the preservation value of a natural area the results for a data set involving up to four successive dichotomous choice questions show that restricted multiple bounded models are rejected by the data with the general model in addition willingness to pay tends to stabilize after the second stage in the elicitation process for the general unrestricted model when taking anchoring effects into consideration it is revealed that individuals responses in the latter stages are influenced by the sequence of bid prices offered in earlier questions nevertheless they do not have a significant effect on welfare estimates

on the existence of cournot equilibrium this paper examines the existence of n firm cournot equilibrium in a market for a single homogeneous commodity it proves that if each firm s marginal revenue declines as the aggregate output of other firms increases which is implied by concave inverse demand then a cournot equilibrium exists without assuming that firms have nondecreasing marginal cost or identical technologies also if the marginal revenue condition fails at a potential optimal point there is a set of firms such that no cournot equilibrium exists the paper also contains an example of nonexistence with two nonidentical firms each with constant returns to scale production