irrational diversification in multiple decision problems the paper deals with multiple decision problems which are similar to the task of guessing the color outcomes of ve independent spinnings of a roulette wheel 60 of whose slots are red and 40 white each correct guess yields a prize of 1 the guess of 5 reds clearly rst order stochastic dominates any other strategy in contrast subjects diversify their choices when facing a multiple decision problem in which the choice is between lotteries with clear objective probabilities the diversi cation is stronger when the subjects face uncertainty without objective probabilities and weaker when the choice problem involves real life actions c 2002 elsevier science b v

releasing the regret lock consumer response to new alternatives after a sale this research examines how consumers behave after they miss a sale and subsequently face a smaller sale for the same or different product according to the proposed theory a two way interaction is predicted in which adding another similar alternative to the choice set leads to higher choice deferral without prior sale information but lower choice deferral with information about missing a larger sale on one of the alternatives in addition the new alternative in the choice set becomes more attractive and captures most of the market share the results from three lab experiments and one field experiment confirm the hypotheses and the proposed mechanism the article concludes with a discussion of the theoretical and managerial implications of the findings

trade policy in a super size me world abstract when a foreign monopolist sets a single market clearing price for its product the sign of the optimal tariff is determined by the extent of pass through also known as the terms of trade effect however when a foreign monopolist employs a second degree price discrimination mechanism in the domestic market the calculus of welfare maximization is very different while there are still terms of trade effects from the imposition of a tariff the existence of such effects are neither necessary nor sufficient to determine the sign of the optimal tariff instead the distribution of valuations within the population is the key determinant of the nature of policy intervention this result differs significantly from the uniform price case and is driven by the incentive compatibility constraint which places the distribution of types at the center of the analysis if there is a relatively large fraction of high valuation types in the population then domestic information rents may be increased by subsidizing imports thereby increasing the consumption of the low valuation types and moving the incentive constraint in favor of the high valuation types however if the share of high types in the population is relatively small then the increase in information rents will also be small but the fiscal implications of a subsidy will be large consequently the optimal policy will be to impose a trade tax

strategic price complexity in retail financial markets abstract there is mounting empirical evidence to suggest that the law of one price is violated in retail financial markets there is significant price dispersion even when products are homogeneous also despite the large number of firms in the market prices remain above marginal cost and may even rise as more firms enter in a non cooperative oligopoly pricing model i show that these anomalies arise when firms add complexity to their price structures complexity increases the market power of the firms because it prevents some consumers from becoming knowledgeable about prices in the market in the model as competition increases firms tend to add more complexity to their prices as a best response rather than make their disclosures more transparent because this may substantially decrease consumer surplus in these markets such practices have important welfare implications

modeling inertia and variety seeking tendencies in brand choice behavior theories of exploratory behavior suggest that inertia and variety seeking tendencies may coexist within the individual implying that the same individual may exhibit inertia and variety seeking at different times depending on his her choice history past research has not allowed for such within consumer variability in these tendencies the purpose of this study is to present a choice model that allows us to identify such hybrid behavior i e a mixture of inertia and variety seeking and to distinguish hybrid behavior from simpler types of behavior such as pure inertia pure variety seeking and zero order behavior the model is estimated at the household level using panel data for three product classes covering a total of 1069 households the empirical analysis shows that more than half the households analyzed exhibited hybrid behavior rather than simpler types of behavior

social exclusion causes people to spend and consume strategically in the service of affiliation when people s deeply ingrained need for social connection is thwarted by social exclusion profound psychological consequences ensue despite the fact that social connections and consumption are central facets of daily life little empirical attention has been devoted to understanding how belongingness threats affect consumer behavior in four experiments we tested the hypothesis that social exclusion causes people to spend and consume strategically in the service of affiliation relative to controls excluded participants were more likely to buy a product symbolic of group membership but not practical or self gift items tailor their spending preferences to the preferences of an interaction partner spend money on an unappealing food item favored by a peer and report being willing to try an illegal drug but only when doing so boosted their chances of commencing social connections overall results suggest that socially excluded people sacrifice personal and financial well being for the sake of social well being

patenting in the shadow of competitors this article empirically examines the patenting behavior of new biotechnology firms that have different litigation costs i show that firms with high litigation costs are less likely to patent in subclasses with many other awards particularly those of firms with low litigation costs this pattern is consistent with the literature on costly litigation which suggests that firms that have high litigation costs will take greater precautions to avoid litigation these results are robust to a variety of control variables and modifications that seek to test alternative explanations

consumer preference for a no choice option the traditional focus in the decision making literature has been on understanding how consumers choose among a given set of alternatives the notion that preference uncertainty may lead to choice deferral when no single alternative has a decisive advantage is tested in seven studies building on recent research the article shows that the decision to defer choice is influenced by the absolute difference in attractiveness among the alternatives provided and is not consistent with trade off difficulty or the theory of search these findings are then extended to show that choice deferral can also be modified for the same alternatives by manipulations that make them appear more similar in attractiveness or that decrease the need to differentiate among them the results are consistent with the notion that preference uncertainty results in a hesitation to commit to any single action since small differences in attractiveness among the alternatives are potentially reversible consistent with this premise the effect of attractiveness difference on choice deferral decreased significantly when subjects were first allowed to practice making monetary trade offs among the available alternatives

how variety seeking versus inertial tendency influences the effectiveness of immediate versus delayed promotions abstract four studies investigate 1 whether a variety seeking versus inertial environment activates a certain mind set about risk propensity and 2 whether this mind set influences preferences for immediate versus delayed promotions study 1 demonstrates that a variety seeking environment activates a risk taking mind set whereas an inertial environment activates a risk averse mind set and that such a difference in risk propensity makes a delayed immediate promotion relatively more appealing for consumers with a variety seeking inertial tendency study 2 reveals that preferences for a brand offering a delayed promotion are stronger when consumers have a variety seeking tendency and that preferences of consumers low vs high in need for cognitive closure are more influenced by the difference in variety seeking versus inertial tendency study 3 provides further insights by allowing participants to be variety seeking or inertial and by controlling for redemption effort and the hedonic utilitarian as

the effectiveness of alternative preference elicitation procedures in predicting choice in a large scale national study the authors evaluated the effectiveness of several preference elicitation techniques for predicting choices the criteria for accuracy included both individual hit

risk mis perception when greater risk reduces risk valuation the authors show that the value of a risky option decreases upon addition of risky prospects of the same valence for instance a medical drug with a potential side effect of seizures is viewed as less threatening when it also has smaller potential side effects such as congestion and fatigue travel insurance covering serious injury is viewed as less attractive when it also covers minor ailments a lottery offering a chance to win an ipad is viewed as less attractive when it also offers a chance to win smaller prizes as a result consumers can perceive normatively more dangerous beneficial options to be less dangerous beneficial and normatively less dangerous beneficial options to be more dangerous beneficial this effect arises because people believe that larger prospects e g seizures are less likely than smaller prospects e g congestion therefore inclusion of smaller prospects by contrast makes a larger prospect appear less likely which in turn reduces the perceived value of the risky option thus this effect arises only when smaller prospects are added to a larger prospect and only when the prospects are probabilistic cognitive load and feelings of personal control also moderate the effect

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

the effect of ordering decisions by choice set size on consumer search consumers frequently engage in sequential decisions this article explores whether the order of these decisions can influence the manner in which consumers search through the possible choice options results from five studies suggest that ordering decisions by increasing vs decreasing choice set size leads to greater search depth measured by both sampling count and decision time initial smaller choice sets in increasing sequences appear to initiate a maximizing mind set which then persists even as participants encounter later larger choice sets these participants report a greater desire to maximize and are less satisfied with their decisions consistent with research on chronic maximizers in addition they continue to exhibit maximizing behavior in subsequent unrelated tasks supporting a mind set account of the differences in search in sum decision makers are proposed to be sticky adapters initial decision strategies seem to constrain the extent to which they adapt to new contexts

when more is less and less is more the role of ideal point availability and assortment in consumer choice contrary to the common wisdom that more choice is always better selections made from large assortments can lead to weaker preferences building on the extant literature this research identifies ideal point availability as a key factor moderating the impact of assortment on choice it is proposed that in the case of large assortments ideal point availability can simplify choice leading to a stronger preference for the selected alternative in contrast for choices made from smaller assortments ideal point availability is proposed to have the opposite effect leading to weaker preferences data obtained from four experiments lend support for the theory and the empirical predictions advanced in this article

commentary on the interpretation of temporal inflation parameters in stochastic models of judgment and choice the implications of salisbury and feinberg s 2010 paper salisbury l c f m feinberg 2010 alleviating the constant stochastic variance assumption in decision research theory measurement and experimental test marketing sci 29 1 1 17 for the process of model development and testing in the field of intertemporal choice analysis is explored although supporting the overall thrust of salisbury and feinberg s critique of previous empirical work in the area we also see their paper as illustrating the dangers of drawing strong inferences about the behavioral interpretation of statistical model parameters without seeking convergent empirical evidence in particular we are skeptical about the extent to which the reported effects of temporal distance on the estimated scale parameter c are uniquely or even primarily due to unobserved error inflation that reflects consumer s uncertainty about future utility this interpretation is brought into question by several lines of reasoning conceptually we note that uncertainty is different from error and that for choice data the error inflation model is mathematically identical to a model in which the scale parameter is a deterministic function of the temporal discount rate empirically a reanalysis of data from previously published experiments does not consistently support temporal error inflation temporal convergence of choice shares or the scale parameter as an explanation of variety seeking in choice sequences in our opinion the cumulative results of research on intertemporal choice require models in which the attributes of choice alternatives are differentially discounted over time despite these findings we advocate that choice researchers should indeed follow salisbury and feinberg s advice to not assume that error variances will be unaffected by experimental manipulations and such effects should be explicitly modeled we also agree that uncovering effects on error variance is just the first step and the ultimate goal should be to rigorously explain the reasons for such effects

a model of stochastic variety seeking in this paper we propose and test a stochastic model of consumer choice that incorporates attribute based variety seeking our stochastic variety seeking model svs has nested within it a fixed variety seeking model a zero order model of choice and a first order pure variety model we compare the svs model to alternative models under stochastic variety seeking we examine the nature of the variety sought and provide a test of the satiation hypothesis unlike fixed variety seeking models our model allows variety seeking to vary in intensity and consistency over individuals as well as over purchase occasions we show that the model is equivalent to a random utility model with the features that the attributes of brands relative to those of the brand previously bought influence choice and the extent of variety seeking is random over choice occasions for a given individual the model permits a closed form solution to the conditional switching probabilities parameterized by variety seeking parameters and dependent on brand attributes we apply our model to individual choice data obtained from a field study specifically designed for the purpose at hand

foreign direct investment and intellectual property rights evidence from hollywood s global distribution of movies and videos abstract traditional thinking about intellectual property rights ipr suggests that as a country strengthens its ipr standards firms will move their governance structures away from equity based institutions such as foreign direct investment fdi towards more market based relations such as licensing agreements this hypothesis is explored by examining the behavior of hollywood studios in both the feature film and video markets in 40 foreign countries the analysis reveals that the behavior of hollywood studios is more complex than this although moderate iprs are associated with a high degree of licensing both high and low standards of ipr encourage more integrated governance structures

reaping what you sow an empirical analysis of international patent harmonization abstract this paper extends analysis of the gatt uruguay round by quantifying the impact of international patent harmonization as implied by the trips agreement patent harmonization has the capacity to generate large transfers of income between countries the us being the major beneficiary developing countries are major contributors to these transfers but canada the uk and japan also make sizable contributions

determinants of patent rights a cross national study abstract this paper presents an index of patent rights for 110 countries for the period 1960 1990 the index is used to examine what factors or characteristics of economies determine how strongly patent rights will be protected the evidence does indicate that more developed economies tend to provide stronger protection but the underlying factors which influence patent protection levels are the country s level of research and development r d activity market environment and international integration which are correlated with its level of development the results qualify however that r d activity influences patent protection levels after a nation s research sector reaches a critical size an implication of this is that to raise patent protection levels in weakly protecting countries it is important to foster a significant research base in those countries and thereby create incentives for protecting patent rights

variety seeking through brand switching a concept of variety seeking behavior is modeled as a stochastic brand choice model the model yields a measure of variety seeking for each individual consumer panel data for 28 products are analyzed for each household and the possibility of market segmentation by variety seeking behavior is explored

the charity beauty premium satisfying donors want versus should desires abstractdespite widespread conviction that neediness should be a top priority for charitable giving this research documents a charity beauty premium in which donors often choose beautiful but less needy charity recipients instead the authors propose that donors hold simultaneous yet incongruent preferences of wanting to support beautiful recipients who tend to be judged as less needy but believing they should support needy recipients the authors also posit that preferences for beautiful recipients are most likely to emerge when decisions are intuitive whereas preferences for needy recipients are most likely to emerge when decisions are deliberative these propositions are tested in several ways first when a beautiful recipient is included in basic choice sets this recipient becomes the most popular option and increases donor satisfaction second heightening deliberation steers choices away from beautiful recipients and toward needier ones third donors explicitly state that they want to

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

playing the field the effect of fertility on women s desire for variety previous research finds that ovulation the time each month when women are most fertile can shift women s mating psychology and increase their desire for new options in men however might ovulation also increase women s desire for new products four studies find that women select a greater number of unique options from consumer product sets at high fertility this effect is especially strong for women in committed relationships additional findings show that the fertility shift in desire for variety in products is driven by the fertility shift in desire for new options in men activating a variety seeking mind set subsequently loyalty to a romantic partner whether manipulated or measured moderated the effect of fertility on consumer variety seeking this research contributes to the literature by revealing when why and how fertility influences desire for variety in consumer choice and highlights the mating motives that underlie this effect

inertia and variety seeking in a model of brand purchase timing previous research on state dependence indicates that a brand s purchase probabilities vary over time and depend on the levels of inertia and variety seeking and on the identity of the previously purchased brand brand choice probabilities obtained from models such as the logit and the probit are however fixed over time conditional on the previous brand purchased and on the levels of marketing variables consequently state dependence has largely been studied as a time invariant phenomenon in brand choice models with the levels of inertia and variety seeking assumed to be constant over time to account for the time varying nature of state dependence would require a model in which brand switching probabilities depend upon interpurchase times one modeling framework that can account for this dependence is based on the hazard function approach the proposed approach works as follows all other factors being equal an inertial household purchasing a brand on a particular occasion is most likely to repurchase that brand on the next occasion if the household switches it will be to a brand located perceptually close in attribute space to the previously purchased brand in other words an inertial household has the highest switching hazard for the same origin and destination brands with a progressively lower hazard rate for brands perceptually located farther and farther away from the origin brand the amount by which the hazard is lowered depends upon the perceptual distance and the inertia level of the household on the other hand if the household is variety seeking the most likely brand purchased would be a brand located farthest away from the previously purchased brand in attribute space in other words the hazard rate of repurchase is the lowest with the rate increasing with the distance of the destination brand from the origin brand and the level of that household s variety seeking tendency the effects of inertia and variety seeking are therefore incorporated at the attribute level into a brand purchase timing model in doing so we attempt to provide greater insight into the nature of state dependence in models of purchase timing our model and estimation procedure will enable us to distinguish between households that are inertial and those that are variety prone in addition to accounting for state dependence the model also accounts for the effects of unobserved heterogeneity among households in their brand preferences and in their sensitivities to marketing activities a majority of studies in marketing using the hazard function approach to investigate purchase timing have not accounted for heterogeneity in marketing mix effects the study integrates recent methods that incorporate the effects of inertia and variety seeking in brand choice models with a semi markov model of purchase timing and brand switching the proposed model enables us to 1 infer market structure via a perceptual map for the sample households and 2 investigate implications for the introduction of a line extension we provide empirical applications of the proposed method using three different household level scanner panel data sets we find that differing levels of inertia and variety seeking characterize the three data sets the findings are consistent with prior beliefs regarding these categories in addition our results indicate that the nature of interbrand purchase timing behavior depends upon the extent of inertia or variety seeking in the data we are also able to characterize the structure of the three product markets studied this provides implications for interbrand rivalry in the market further we demonstrate how the model and results can be used to predict the location of a line extension in the perceptual space of households finally we obtain implications for the timing of brand promotions

modeling multiple sources of state dependence in random utility models a distributed lag approach we propose a utility theoretic brand choice model that accounts for four different sources of state dependence 1 effects of lagged choices structural state dependence 2 effects of serially correlated error terms in the random utility function habit persistence type 1 3 effects of serial correlations between utility maximizing alternatives on successive purchase occasions of a household habit persistence type 2 and 4 effects of lagged marketing variables carryover effects our proposed model also allows habit persistence to be a function of lagged marketing variables while accommodating the effects of unobserved heterogeneity in household choice parameters this model is more flexible than existing state dependence models in marketing and labor econometrics using scanner panel data we find structural state dependence to be the most important source of state dependence marketing mix elasticities are systematically understated if state dependence effects are incompletely accounted for the seetharaman and chintagunta 1998 model is shown to recover spurious variety seeking effects while overstating habit persistence effects ignoring habit persistence type 1 leads to an underestimation while ignoring habit persistence type 2 leads to an overestimation of structural state dependence effects we find lagged promotions to have carryover effects on habit persistence ignoring one or more sources of state dependence underestimates the total incremental impact of a sales promotion we draw implications for manufacturer pricing

who enjoys trips abroad an empirical analysis of intellectual property rights in the uruguay round analysis of the uruguay round is extended by quantifying the impact of the trips agreement the static costs of raising the standards of patent protection are captured by the transfers of income between countries with the majority of countries estimated to make net payments abroad the united states being a major beneficiary to offset these transfers the model provides estimates of the dynamic benefits from the greater incentive to innovate revealing that there is potential for all countries to benefit from the trips agreement in the long run however the distribution of these benefits is highly skewed towards developed countries jel classification o34 f43 qui tire profit des adpics a l etranger une analyse empirique des droits de propriete intellectuelle dans la ronde de l uruguay on analyse les decisions de la ronde de l uruguay en vue de quantifier l impact de l accord sur les droits de propriete intellectuelle qui touchent au commerce les couts statiques de normes plus elevees pour la protection des brevets sont mesures par les transferts de revenus entre pays on estime que la majorite des pays effectuent des transferts nets vers l exterieur et que les etats unis sont un beneficiaire important de ces transferts pour compenser ces transferts le modele cherche a determiner les avantages dynamiques qu il y a a encourager ainsi l innovation et montre qu il y a un potentiel de gains pour tous les pays decoulant des accords sur les adpics a plus long terme cependant la repartition de ces avantages est fortement biaisee en faveur des pays developpes

characteristics of patent litigation a window on competition we examine the patenting behavior of firms in an industry characterized by rapid technological change and cumulative innovation recent survey evidence suggests that semiconductor firms do not rely heavily on patents to appropriate returns to r d yet the propensity of semiconductor firms to patent has risen dramatically since the mid 1980s we explore this apparent paradox by conducting interviews with industry representatives and analyzing the patenting behavior of 95 u s semiconductor firms during 1979 1995 the results suggest that the 1980s strengthening of u s patent rights spawned patent portfolio races among capital intensive firms but it also facilitated entry by specialized design firms copyright 2001 by the rand corporation

explanations of unemployment economists commonly distinguish between two sorts of unemployment roughly speak ing the involuntarily unemployed workers are unwillingly out of work i e they feel that they would be better off with jobs on the other hand the voluntarily unemployed workers prefer to be out of work for any of a wide variety of reasons e g because they are searching or training for a job or because they choose leisure over work

an investigation into the order of the brand choice process this paper investigates the order of the brand choice process at the individual family level using a variety of tests t likelihood ratio binomial runs and multinomial runs tests the test of stationarity developed permits separate analyses for stationary and nonstationary purchase sequences our analyses indicate that the purchase sequences of a majority of stationary consumers are consistent with the zero order assumption this result is observed for all the nine frequently bought packaged goods studied with the use of panel data and for a product category soft drinks using experimental data

positioning and pricing in a variety seeking market we study competitive positioning and pricing strategies in markets where consumers seek variety variety seeking behavior is modeled as a decrease in the willingness to pay for the product purchased on the previous purchase occasion using a three stage hotelling type model we show that the presence of variety seeking consumers reduces product differentiation offered in equilibrium thereby explaining some otherwise counterintuitive findings in empirical research we find that firms charge higher prices in period 1 and lower prices in period 2 the lower price in period 2 represents the price incentive that firms need to offer to prevent the variety seeking consumers from switching furthermore we find that the observed switching in a market may not fully capture the true magnitude of the underlying variety seeking tendencies among consumers finally we show that the presence of variety seeking consumers leads to lower firm profits and a higher consumer surplus surplus increases for variety seeking consumers as well as regular consumers therefore the presence of variety seeking consumers benefits everyone in the market

future preference uncertainty and diversification the role of temporal stochastic inflation consumers choices tend to display greater variety when made for future versus immediate consumption previous accounts of such diversification differences suggested that they are driven primarily by deterministic shifts in underlying preference through a series of simulation studies we propose and assess an alternative contributory mechanism temporal stochastic inflation the greater uncertainty typifying choices made for the future we find effect sizes to be strongly influenced by relative brand attractiveness brand attractiveness uncertainty and degree of stochastic inflation although not preference heterogeneity moreover effect sizes are consistent with prior studies that attributed diversification differences to underlying preference shifts alone

giving the gift of goodness an exploration of socially responsible gift giving previous research demonstrates that consumers support firms csr activities and increasingly demand socially responsible products and services however an implicit assumption in the extant literature is that the purchaser and the consumer of the product are the same person the current research focuses on a unique form of socially responsible consumption behavior gift giving through 30 depth consumer interviews we develop a typology of consumers based on whether consumers integrate csr related information into purchases and whether the purchases are for themselves or for others i e gifts we find that in some instances consumers actively avoid purchasing products from socially responsible organizations and do so with the intention of managing their impressions with the gift recipient this is counter to previous research that suggests consumers often choose to make socially responsible consumption decisions in efforts to satisfy self presentation concerns in addition the decision to engage in socially responsible consumption for oneself but not for others was motivated by a variety of factors including the role of the recipient and a concern over the credibility of socially responsible gifts finally some participants who do not incorporate csr into their own personal consumption chose gifts based on a variety of csr activities in an effort to build awareness for socially responsible organizations

welfare effects of global patent protection this paper uses a simple model of invention and patent protection to examine the welfare effects of extending patent protection from the country where invention takes place to another country that is only a consumer of invented products it is shown that while the welfare of the inventing country certainly rises with the extension of patent protection that of the other country probably falls and may well fall by more than the increase in welfare of the inventing country in particular as patent protection is extended to a larger and larger portion of the world the effect on the welfare of the world as a whole of extending it to the rest of the world becomes negative

trips trade and growth a two country model of endogenous growth is employed to assess the importance of intellectual property rights to trade growth and technology transfer the paper provides theoretical results linking the intellectual property rights regime to trade patterns aggregate r d worldwide growth and aggregate welfare measures failure to provide patent protection for foreign made innovations forces innovators to employ less than the best practice research technologies reduces aggregate r d activities worldwide effectively eliminates technology transfer across countries and reduces worldwide growth copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the impact of private versus public consumption on variety seeking behavior three experiments demonstrate that people incorporate more variety into their consumption decisions when their behavior is subject to public scrutiny studies 1 and 2 indicate that consumers expect others to evaluate their decision more favorably if they choose variety and that this sometimes leads individuals to incorporate more variety into their public than private decisions results of study 2 confirm predictions that a relevant individual difference variable self monitoring moderates the effects of expected evaluation on variety seeking the final study demonstrates that pressure to choose variety in public is eliminated when a social cue signals the appropriateness of consuming one s favorites

me myself and my choices the influence of private self awareness on choice abstract this article examines the impact of private self awareness on consumer decision making in four studies the authors show that the ease of preference formation accompanying private self awareness makes people more willing and able to rely on their personal preference weights as the authors predict privately self aware consumers are less inclined to opt for a varied choice set study 1 and are less likely to select compromise options studies 2 and 3 unless they find that it is too difficult to construct their personal preferences study 4

an empirical comparison of logit choice models with discrete versus continuous representations of heterogeneity abstract currently there is an important debate about the relative merits of models with discrete and continuous representations of consumer heterogeneity in a recent jmr study andrews ansari and currim 2002 hereafter aac compared metric conjoint analysis models with discrete and continuous representations of heterogeneity and found no differences between the two models with respect to parameter recovery and prediction of ratings for holdout profiles models with continuous representations of heterogeneity fit the data better than models with discrete representations of heterogeneity the goal of the current study is to compare the relative performance of logit choice models with discrete versus continuous representations of heterogeneity in terms of the accuracy of household level parameters fit and forecasting accuracy to accomplish this goal the authors conduct an extensive simulation experiment with logit models in a scanner data context using an experimental design based on aac and other

international patent protection 1960 2005 abstract this note provides an update to the index of patent protection published in this journal in 1997 the original paper presented the index for 1960 1990 for 110 countries the index has now been updated to 2005 and extended to 122 countries the adoption of stronger patent laws and the composition of patent rights vary across countries by level of economic development

feeling economically stuck the effect of perceived economic mobility and socioeconomic status on variety seeking five studies provide converging evidence for the joint effect of perceived economic mobility and socioeconomic status ses on compensatory behavior such that low ses consumers who perceive low economic mobility i e economically stuck consumers seek more variety than other consumers we trace this effect to these consumers desire to compensate for their low sense of personal control furthermore we show that these consumers variety seeking tendency disappears when their sense of control is boosted by other means or when the more varied option is not associated with a sense of control alternative explanations based on instrumental benefits reactance and affect were tested and did not account for the effect thus the current research provides fresh insights to consumer research by contributing to the literature on compensatory behavior variety seeking and ses

are results from non hypothetical choice based conjoint analyses and non hypothetical recoded ranking conjoint analyses similar conflicting findings have been found in previous research that compared choice based conjoint analysis and ranking conjoint analysis in a public good setting the present paper revisits this issue for a private good in a non hypothetical context using small and large choice sets our results suggest that in a small choice set setting participants preferences and willingness to pay are similar across the two conjoint analysis formats however in large choice sets a divergence between the two conjoint analysis formats emerges hence the two conjoint analysis formats can only be used interchangeably in small choice sets not in large choice sets

when an importer s protection of ipr interacts with an exporter s level of technology comparing the impacts on the exports of the north and south using bilateral trade data of countries from 2000 to 2007 this paper contributes to the empirical literature on the role of intellectual property rights iprs in global trade the existing literature has focused on how iprs in the destination country affect exports from a source country in this paper we add an additional dimension the level of technology of the exporting country lt this is quite important for distinguishing the impact of iprs on the exports of developed and developing countries since the technology levels vary across countries at different stages of development and intellectual property rights better protect exports that are technologically advanced than exports that are imitative and potentially infringing by factoring in the level of technology lt our empirical analysis makes the case that iprs can act as a barrier to the exports from the south especially the rapidly catching up economies and thus be a source for the middle income trap phenomenon

short and long run effects of a tax cut in an open economy with a sticky real wage the effects of a tax cut in an open economy with a sticky real wage are studied in the short run the lower the tax rate the lower the real wage the long run movement of this wage rate depends on the level of output in the short run a tax cut will increase output but the effects on the trade balance price level and total tax revenue are ambiguous a reduced relative price between domestic and imported goods is a necessary condition for an improved trade balance which in turn is a necessary condition for an increase in tax revenue in the long run the tax cut will have no output effect while the real wage and the relative price between domestic and imported goods will rise and the trade balance will deteriorate the price level will increase if the exchange rate is fixed but is unaffected if the exchange rate is flexible

the economics of product variety a survey demand for variety may arise from a taste for diversity in individual consumption and or from diversity in tastes even when each consumer chooses a single variant the full degree of variety potentially demanded will not in general be supplied because scale economies even to a small degree mean that the potential welfare or revenue gain from greater variety must be balanced against the lower unit production costs with fewer variants the economics of product variety consists essentially in analysing the effect of this balance in different situations and comparing the degree of product variety for different market structures with each other and with the optimum the survey commences with the work on market structures with single product firms generalized monopolistic competition tracing modern developments in both the chamberlinian and hotelling traditions the latter has been particularly fruitful due to the expansion of the original locational ideas into virtual spaces in product characteristics the emphasis in recent work on product variety has been on multiproduct firms in both monopolistic and oligopolistic structures including strategic market preemption although most work has been in a full information context there have been advances in product variety under imperfect information either by consumers to properties of the firms products or firms as to consumers demands

money status and the ovulatory cycle each month millions of women experience an ovulatory cycle that regulates fertility previous consumer research has found that this cycle influences women s clothing and food preferences the authors propose that the ovulatory cycle actually has a much broader effect on women s economic behavior drawing on theory in evolutionary psychology the authors hypothesize that the week long period near ovulation should boost women s desire for relative status which should alter their economic decisions findings from three studies show that women near ovulation seek positional goods to improve their social standing additional findings reveal that ovulation leads women to pursue positional goods when doing so improves relative standing compared with other women but not compared with men when playing the dictator game for example ovulating women gave smaller offers to a female partner but not to a male partner overall women s monthly hormonal fluctuations seem to have a substantial effect on consumer behav

differentiation and parity in assortment pricing are consumers more likely to purchase an item from an assortment in which options are priced at parity or from an assortment in which options vary in price this research examines the influence of parity pricing and differentiation pricing strategies on consumer choice and identifies conditions in which parity pricing facilitates choice as well as conditions in which choice is facilitated by differential pricing in a series of three experiments the impact of assortment pricing on choice is shown to be a function of the uncertainty associated with consumers preferences and the consistency of these preferences with options prices

imitation costs and patents an empirical study it has long been recognised that the costs of imitating new products have an important effect on the incentives for innovation in a market economy as arrow i962 and others have pointed out if firms can imitate an innovation at a cost that is substantially below the cost to the innovator of developing the innovation there may be little or no incentive for the innovator to carry out the innovation in their discussions of the innovation process economists frequently have called attention to the major role played by the costs of imitation but there has been little or no attempt to measure these costs to test various hypotheses concerning the factors influencing them or to estimate their effects in this paper we report some findings of what seems to be the first study of this topic in addition we present data regarding the effects of patents on imitation costs and on the rate of innovation

can tax cuts beat the phillips curve abstract an economy with a non vertical long run phillips curve defined for employment and the growth rate of real disposable wage is assumed steady state effects of long run gradual changes in the tax rate and public expenditure are analyzed the slower the tax rate increases or the faster it is reduced the higher the steady state employment level the higher the inflation rate and the larger the trade deficit an increase in the growth rate of public expenditure has the same effects a combined reduction in tax increases and public expenditure may increase steady state employment reduce inflation and improve the trade balance

bounded rationality in pricing under state dependent demand do firms look ahead and if so how far the authors propose an empirical procedure to investigate the pricing behavior of manufacturers and retailers in the presence of state dependent demand rather than assuming that firms are perfectl

inferring the order of the choice process using consumer purchase histories the small sample properties of the multinomial runs mr test which is often used to test for effects of previous brand choices on current brand choice probabilities are explored in this article through a monte carlo study of different buyer level brand choice probability models the power and the actual size of this test under a null hypothesis of no previous brand choice effects are shown to depend on the nature of the true underlying model length of purchase history and skewness in baseline choice probabilities we provide some guidelines for when the mr test is more useful in empirical research

contextual inference in markets on the informational content of product lines context can influence decisions this malleability of choice is usually invoked as evidence that people do not maximize stable preference orderings in a market equilibrium however context conveys payoff relevant information to consumers consequently these consumers rationally violate naive formulations of standard choice theoretic principles i identify informational asymmetries under which apparently anomalous behaviors namely the compromise effect and choice overload arise as market equilibria firms respond to consumers contextual inference in case of the compromise effect a firm may introduce premium loss leaders expensive goods of overly high quality that increase the demand for other goods

optimal product line design when consumers exhibit choice set dependent preferences in a market of consumers with varying willingness to pay using product line as a discrimination tool may extract higher profits than serving all consumers with a single product local context effects however point to yet another consideration in designing product lines how the appeal of a product changes with the context provided by other products in the choice set i present a model of product line design that incorporates both discrimination and context management goals and offers recommendations for the variety and positioning of products to this end the model makes use of a framework that allows preferences to be choice set dependent given this framework i study how the firm manages externalities between products created by such dependencies the firm creates distortions above and beyond those resulting from discrimination motives alone for example in a vertically differentiated market for quality quality distortions exist even for the consumers with the highest valuations the range of quality provisions given the number of products is compressed as the relative importance of unfavorable comparisons among products increases surprisingly this compression may even lead the firm to forego discrimination among consumers regardless of the cost of offering distinct products

pushing subjects beyond rationality with more alternatives in experimental auctions the use of experimental economics in valuation of market and nonmarket goods has grown over the past few years the ability of experimental auctions eus to reveal consumer preferences and their malleability has been praised in previous literature because of the high cost of conducting eus researchers usually present multiple products to participants determining how many products to present has no clear guideline the results of this study show that subjects do not value products the same way across different number of options offered to them the main indicator is the increasing variance in responses for a benchmark product when more products are available with an econometric specification allowing for heteroscedasticity as a function of the number of product offerings the results indicate that the number of goods available for bidding is not to be taken as a trivial task in experimental design for value elicitation

scarcity polarizes preferences the impact on choice among multiple items in a product class this research examines how the salience of scarcity influences choices of individual items from a product class the authors propose that overall perception of scarcity versus overall perception of abundance increases choice share of the most preferred item from a product class they argue that this phenomenon occurs because scarcity induces arousal and the heightened arousal polarizes the evaluations of individual items contained in the choice set the results from five experiments show that scarcity versus abundance broadens the discrepancy between the liking of the favorite and nonfavorite items and leads to a greater choice share of the favorite item the findings provide support for the arousal based explanation showing that the effect of scarcity salience on choices is mediated by consumers reported arousal level and moderated by an experimentally induced arousal state

economic perspectives on the development of complex products for increasingly demanding customers rival firms produce products with a variety of characteristics it is typically assumed that consumers purchase those products that most closely match their ideal set of characteristics orthodox production theory economics offers no analysis of how to divide limited product development budgets between different characteristics furthermore orthodox consumer economics assumes buyers make compensatory trade offs between different product characteristics this approach ignores problems caused by bounded rationality that in complex choice environments leads buyers to formulate simplifying heuristics such as hierarchical non compensatory preferences over characteristics an integrative analytical framework is developed drawing upon orthodox economics behavioural economics and evolutionary economics implications for the relationship between incremental product development and the firm s evolving capabilities are emphasized

products with branded components an approach for premium pricing and partner selection an increasing number of products are being sold with components that themselves are brand names examples are personal computers with intel microprocessors and diet soft drinks that use the nutrasweet formulation branded components may alter consumers valuation of the bundle necessitating changes in the ways firms identify and price such bundled products surprisingly the existing marketing literature is silent on this issue the purpose of our paper is to propose an analytical approach that helps marketers of products with branded components make optimal pricing and partner selection decisions our managerial objectives are twofold a to the seller of the bundled product we suggest the optimal bundled product offering optimal selling prices of alternative products revenues and profits and b to the branded component manufacturers we indicate the most favorable alliance partners and payoff gains losses of aligning with other branded components instead of unbranded alternatives our analytical approach is also likely to be helpful to academics researching bundling and ingredient branding issues the specific problem modeled assumes the bundled product has two components that are consumed jointly furthermore each component can be either a brand name or unbranded in this model the consumer has no control over the choice of the components in the bundle the seller decides what form of bundle components i e branded or unbranded to offer we assume that the product that is marketed eventually enjoys a monopoly drawing from research in signaling and brand alliance we posit each branded component may either enrich or suppress the value of the partnering component in the bundle as perceived by the consumers our approach has three methodological stages first we build an individual level model to assess the valuation of alternative products and their principal components at the level of a randomly drawn consumer to do so we rely primarily on the theory of reservation prices and weber s theory on price value changes second we aggregate such valuation across consumers to assess the market s overall valuation for this purpose we invoke parametric distributions based on integral transform theory third we develop payoff functions based on market valuation of alternative products and supply side costs the managerial objectives are met based on results from this stage our approach was successfully applied to the context of a university bookstore that intends to sell windows based laptop computers the two principal components of the laptop computer bundle are the microprocessor chip and the personal computer platform on which the chip is implanted the seller may choose either compaq with intel inside or a simpler bundle featuring one of these with an unbranded complementary component or an entirely unbranded bundle we used data collected from 192 potential consumers via a survey included in the survey were measures of consumers perceptions of functional aspects of the components and their reservation prices for alternative bundled products the approach identified the most profitable bundle for the seller and its optimal price it also provided estimates of the revenue impact of the gain or loss for each branded component by partnering the other branded component instead of the unbranded alternative as such the model facilitates the determination of the optimal price price premium and profits for products with branded components as well as the identification of the ideal partner for each branded component manufacturer it is apt to caution that products with branded components need not always lead to price premiums or lead to win win outcomes reasons such as incongruity between the branded components or domination of one of the components over the other may drive potential consumers away thus hurting profits implications of the results to negotiate component prices are discussed in the paper the study limitations and directions for future research are also presented

estimates of the value of patent rights in european countries during the post 1950 period this paper examines the distribution of the values of patent rights in the united kingdom france and germany during the post 1950 period these values are inferred from the behavior of patentees with respect to payment of renewal fees on their patents a simple economic model of renewal decisions is combined with data on the proportion of patents renewed at alternative ages and the renewal fee schedules to produce estimates of the distribution and the total value of patent rights in these countries moreover the data indicate that there have been changes in the value distribution and we follow these changes over the period the empirical results of particular interest concern the total value of patent rights and the relationship between changes in it and changes in the quantity of patents the skew in the distribution of patent values and the rate of obsolescence on the returns to patents

vertical differentiation with variety seeking consumers we analyze price and quality competition in a vertically differentiated duopoly in which consumers have a preference for variety the preference for variety is a consequence of diminishing marginal utility for repeated experiences with the same product we find consumer variety seeking can either soften or intensify price competition depending on the difference in firm qualities and the strength of consumer preference for variety when the qualities are similar or the consumer preference for variety is strong prices and profits are higher than would be obtained in the absence of variety seeking on the other hand if qualities differ enough or the preference for variety is weak stronger preferences for variety are associated with more intense price competition and lower profits when firms set their qualities before competing on price and the range of feasible qualities is restricted such that variety seeking softens competition competing firms choose to minimally differentiate themselves from each other the preference for variety can drive the firms to offer multiunit discounts and the greater price flexibility from these discounts does not necessarily reduce profits relative to simple unit pricing this paper was accepted by j miguel villas boas marketing

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

flexibility in consumer purchasing for uncertain future tastes consumers often simultaneously purchase multiple units in the same product category whether they are best off purchasing an assortment of alternatives or an equal number of one alternative is addressed in this paper models of an expected utility maximizing consumer are developed and it is shown that an assortment may have greater expected utility than an equal number of any one alternative the rationale is that the assortment allows the consumer to choose from inventory the alternative most appropriate for a consumption occasion using preference information not available at the purchase occasion it is also shown that when consuming alternatives from inventory the consumer may forego the alternative offering the most utility in the expectation that it will yield even more utility in the future

multiple routes to self versus other expression in consumer choice abstract studies of consumer decision making often begin with the identification of a dimension on which options differ followed by an analysis of the factors that influence preferences along that dimension building on a conceptual analysis of a diverse set of problems the authors identify a class of related consumers choices e g extreme vs compromise hedonic vs utilitarian risky vs safe that can all be classified according to their levels of self versus other expression or un conventionality as shown in four studies these problem types respond similarly to manipulations that trigger or suppress self expression specifically priming self expression systematically increases the share of the self expressive options across choice problems conversely expecting to be evaluated decreases the share of the self expressive options across the various choice dilemmas in addition priming risk seeking increases only the choice of risky gambles but not of other self expressive options these find

patents as options some estimates of the value of holding european patent stocks in many countries holders of patents must pay an annual renewal fee in order to keep their patents in force this paper uses data on the proportion of patents renewed and the renewal fees faced by post world war ii cohorts of patents in france the united kingdom and germany in conjunction with a model of patent holders renewal decisions to estimate the returns earned from holding patents in these countries since patents are often applied for at a nearly stage in the innovation process the model allows agents to be uncertain about the sequence of returns that will be earned if the patent is kept inforce formally then the paper presents and solves a discrete choice optimal stochastic control model derives the implications of the model on aggregate behaviour and then estimates the parameters of the model from aggregate data the estimates enable a detailed description of the evolution of the distribution of returns earned from holding patents over their life spans and calculations of both the annual returns earned from holding the patents still in force or the patent stocks in the alternative countries and the distribution of the discounted value of returns earned from holding the patents in a cohort this abstract was borrowed from another version of this item

variety vice and virtue how assortment size influences option choice assortment size has been shown to influence whether consumers make a choice but could it also influence what they choose five studies demonstrate that because choosing from larger assortments is often more difficult it leads people to select options that are easier to justify virtues and utilitarian necessities are generally easier to justify than indulgences consequently choosing from larger assortments often shifts choice from vices to virtues and from hedonic to utilitarian options these effects reverse however when situational factors provide accessible reasons to indulge underscoring the role of justification implications for choice difficulty and justification processes are discussed

great expectations assortment size expectations and satisfaction abstract recent research challenges the idea that greater choice is always desirable showing that larger assortments can increase choice deferral and switching the current research demonstrates that even when consumers make a purchase the same item may generate lower satisfaction when chosen from a larger rather than a smaller assortment the authors explain this effect in terms of an expectation disconfirmation mechanism when assortments are small consumers have low expectations about their ability to match their preferences as assortment sizes increase so do consumers expectations of the degree of preference match they can achieve subsequently consumers may experience greater negative expectation disconfirmation or less positive expectation disconfirmation when a chosen item comes from a larger rather than a smaller set either less positive or more negative disconfirmation leads to lower choice satisfaction the results from three studies support this expectation based process and establish t

on intertemporal selfishness how the perceived instability of identity underlies impatient consumption how does the anticipated connectedness between one s current and future identity help explain impatience in intertemporal preferences the less consumers are closely connected psychologically to their future selves the less willing they will be to forgo immediate benefits in order to ensure larger deferred benefits to be received by that future self when consumers measured or manipulated sense of continuity with their future selves is lower they accept smaller sooner rewards wait less in order to save money on a purchase require a larger premium to delay receiving a gift card and have lower long term discount rates

the discriminating consumer product proliferation and willingness to pay for quality abstract the authors propose that a crowded product space motivates consumers to better discriminate between options of different quality specifically this article reports evidence from three controlled experiments and one natural experiment that people are prepared to pay more for high quality products and less for low quality products when they are considered in the context of a dense as opposed to a sparse set of alternatives to explain this effect the authors argue that consumers uncertain about the importance of quality learn from observing market outcomes product proliferation reveals that other consumers care to discriminate among similar alternatives and in turn this inference raises the importance of quality in decision making

price competition in markets with consumer variety seeking we investigate price competition between firms in markets characterized by consumer variety seeking while previous research has addressed the effect of consumer inertia on prices there exists no research on the effects of variety seeking on price competition our study fills this gap in the literature using a two period duopoly framework as in klemperer s analysis of inertial markets we show that the noncooperative pricing equilibrium in a market with consumer variety seeking may be the same as the collusive outcome in an otherwise identical market without variety seeking specifically our variety seeking model implies tacit collusion between firms in both periods unlike the inertia model of klemperer that implies tacit collusion between firms only in the second period but implies fierce price competition in the first period when consumers are assumed to have rational expectations about future prices the implied first period prices increase further which is consistent with what klemperer finds in an inertial market to summarize while our variety seeking analyses support two key results pertaining to second period prices and rational expectations previously derived for inertial markets by klemperer they depart from one key result pertaining to first period prices

a model of balanced choice behavior in some product categories consumers appear to alternate among items in a consistent and purposeful though not entirely deterministic fashion such alternation occurs even in the absence of any apparent external influences on choice to explain such balanced choice behavior we present a model based upon the premise that past consumption influences the utility of items on subsequent choice occasions individuals may seek variety on certain product attributes and exhibit loyalty toward others the model specification yields a logit choice model which may be calibrated using consumption diary panel data at the individual or cross sectional level

capturing consumption flexibility in assortment choice from scanner panel data this study develops and estimates a model to empirically identify two behavioral effects namely consumption flexibility and state dependence that may underlie temporal and horizontal assortment choice using scanner panel data where consumption information is unavailable the proposed approach permits a consumer s consumption utility to be dependent on previous consumptions thus capturing state dependence both across purchase occasions and within horizontal assortments moreover consumers purchase and consumption decisions are modeled at two distinctive and sequentially related stages which allows for incorporating the effect of consumption flexibility the model is estimated on scanner panel data of yogurt purchase it is found that the two captured effects provide strong empirical support with face validity for the temporal and horizontal assortment choice patterns observed in the data the behavioral insights derived from estimating the proposed model can also be translated into significant managerial implications

the influence of consumer distractions on the effectiveness of food sampling programs abstract sampling programs are a significant element of the promotions mix particularly in the food category in this research the authors find that the degree to which consumers are distracted while sampling a product can influence the effectiveness of such programs in particular the authors find that distraction actually increases subsequent choice of the sampled food a finding that is contrary to what industry experts predict the authors propose a dual process model of somatosensory experiences to account for the findings in line with the model the findings suggest that the ultimate pleasure that a consumer derives from the taste of a food sample depends on two components an informational component and an affective component furthermore the findings suggest that distraction affects the subsequent choice of the sampled item by increasing decreasing the impact of the affective component informational component on subsequent choice