price promotions in choice models promotions are used in marketing to increase sales and drive profits by temporarily decreasing the price per unit of a good some price promotions apply to all quantities 20 off some have limits on the number of units that can be purchased at a reduced price and others only offer the discount if the volume purchased is sufficiently high we develop a model of price promotions in the context of a direct utility model where its effects are incorporated through the budget constraint price promotions complicate the estimation and analysis of direct utility models because they induce kinks and points of discontinuity in the budget set we propose a bayesian approach to addressing these irregularities and demonstrate the ability of the direct utility model to be used in counterfactual analyses of price promotions we investigate the stability of utility function estimates for consumers under alternative price promotions and find that the majority of the effect of a price promotion is through the budget s

design and analysis of simulated consumer choice or allocation experiments an approach based on aggregate data the authors integrate concepts in conjoint analysis and discrete choice theory in econometrics to develop a new approach to the design and analysis of controlled consumer choice or resource allocat

should reference alternatives in pivot design sc surveys be treated differently analysts are increasingly making use of pivot style stated choice sc data in the estimation of choice models these datasets often contain a reference alternative whose attributes remain invariant across replications for the same respondent this paper presents evidence to suggest that respondents react differently to the attributes of these reference alternatives and those of purely hypothetical alternatives while some such evidence has been reported in the existing literature this paper goes further and details a number of different departures from a common treatment of the two types of alternatives relating both to the observed part of utility and the error term

the link between response time and preference variance and processing heterogeneity in stated choice experiments abstract in this article we utilize the time respondents require to answer a self administered online stated preference survey while the effects of response time have been previously explored this article proposes a different approach that explicitly recognizes the highly equivocal relationship between response time and respondents choices in particular we attempt to disentangle preference variance and processing heterogeneity and explore whether response time helps to explain these three types of heterogeneity for this we divide the data ordered by response time into approximately equal sized subsets and then derive different class membership probabilities for each subset we estimate a large number of candidate models and subsequently conduct a frequentist based model averaging approach using information criteria to derive weights of evidence for each model our findings show a clear link between response time and utility coefficients error variance and processing strategies our results thus emphasize the importance of considering response time when modeling stated choice data

ordering effects and choice set awareness in repeat response stated preference studies we present an experiment designed to investigate the presence and nature of ordering effects within repeat response stated preference sp studies our experiment takes the form of a large sample full factorial discrete choice sp exercise investigating preferences for tap water quality improvements our study simultaneously investigates a variety of different forms of position dependent and precedent dependent ordering effect in preferences for attributes and options and in response randomness we also examine whether advanced disclosure of the choice tasks impacts on the probability of exhibiting ordering effects of those different types we analyze our data both non parametrically and parametrically and find robust evidence for ordering effects we also find that the patterns of order effect in respondents preferences are significantly changed but not eradicated by the advanced disclosure of choice tasks a finding that offers insights into the choice behaviors underpinning order effects

optimal sales force diversification and group incentive payments in this research we show that the interaction between territory allocation and sales force compensation two key drivers of sales productivity strongly affects the firm s profitability we analyze an agency theoretic model that jointly considers the degree of negative or positive correlation across territory outcomes differences in territories sales potentials the agency problem with risk averse salespeople and the availability of both own territory compensation elements such as commission and elements dependent on the performance of others such as group commissions or tournaments we find that allocating salespeople to negatively correlated sales territories beneficially diversifies each salesperson s portfolio of sales outcomes when this allocation includes a group commission pay component and can improve profitability even with a decrease in average territory sales performance in a larger sales force a balanced allocation of salespeople coupled with a group commission dominates an imbalanced allocation comparing piece rate compensation with or without a group commission component to tournaments alongside the allocation problem we find that tournaments are favored over piece rate plans when territories are highly positively correlated territory sales potentials are similar and salespeople have a low disutility for effort and are not very risk averse a piece rate plan conversely dominates a tournament when these conditions are reversed

elimination and selection by aspects in health choice experiments prioritising health service innovations priorities for public health innovations are typically not considered equally by all members of the public when faced with a choice between various innovation options it is therefore possible that some respondents eliminate and or select innovations based on certain characteristics this paper proposes a flexible method for exploring and accommodating situations where respondents exhibit such behaviours whilst addressing preference heterogeneity we present an empirical case study on the public s preferences for health service innovations we show that allowing for elimination by aspects and or selection by aspects behavioural rules leads to substantial improvements in model fit and importantly has implications for willingness to pay estimates and scenario analysis

long run effects of promotion depth on new versus established customers three field studies we use the results of three large scale field experiments to investigate how the depth of a current price promotion affects future purchasing of first time and established customers while most previous studies have focused on packaged goods sold in grocery stores we consider durable goods sold through a direct mail catalog the findings reveal different effects for first time and established customers deeper price discounts in the current period increased future purchases by first time customers a positive long run effect but reduced future purchases by established customers a negative long run effect overall the results show evidence of several long run effects forward buying selection customer learning and increased deal sensitivity short run metrics that ignore these effects overstate the overall change in demand for established customers the implication is that if prices are set based on short run elasticity then they will be too low among first time customers the short run metrics underestimate the total increase in demand if prices are set based on short run elasticity then they will be too high

implementing results oriented trade policies the case of the us japanese auto parts dispute abstract why would the us threaten punitive tariffs on luxury autos to implement a market share target in auto parts we show that by making threats to a linked market a market share target may be implemented with fairly weak informational and administrative requirements moreover such policies can be both pro competitive and advantageous to us firms

promotion signal proxy for a price cut evidence suggests that some consumers react to promotion signals without considering relative price information we adopt petty and cacioppo s elaboration likelihood model elm to explain this behavior in terms of the elm s peripheral route to persuasion in which the promotion signal is taken as a cue for a price cut experimental results show that low need for cognition individuals react to the simple presence of a promotion signal whether or not the price of the promoted brand is reduced but that high need for cognition individuals react to a promotion signal only when it is accompanied by a substantive price reduction

benefit estimates for landscape improvements sequential bayesian design and respondents rationality in a choice experiment a multi attribute stated preference approach is used to value low and high impact actions on four major landscape components addressed by the rural environment protection scheme in ireland several methodological issues are addressed the use of prior beliefs on the relative magnitudes of parameters standardized description of different levels of landscape improvements via image manipulation software adoption of efficiency increasing sequential experimental design and sensitivity of benefit estimates to inclusion of responses from irrational respondents results suggest that bayesian design updating delivers significant efficiency gains without loss in respondent efficiency and estimates are upward biased when irrational respondents are included

inferred and stated attribute non attendance in food choice experiments we review the current literature on attribute non attendance in stated choice and use data from beef and chicken choice experiments using both inference and the respondents own statements inference is based on panel data analysis by mixed logit models of choice with both discrete and continuous mixtures of coefficients and is conditional on the observed pattern of choice information from respondent statements on non attendance is directly embedded in the specification of the indirect utility function results show no clear winner between the inferential approaches but the inference based on constrained latent class panel models better matches the observed data

consumer normal price estimation market versus personal standards in reference price models internal reference price is typically estimated from actual market prices given the generally poor price knowledge consumers have exhibited in prior research the question is whether it is reasonable to use actual market prices to estimate consumers internal reference price standards the initial answer provided in this research surprisingly is yes although internal reference prices are measurable and do affect consumer price perception the gains in measuring and using those standards in predicting brand choice for frequently purchased products may not be worth the costs reasons why the surrogate price measure may work and implications for the measurement of internal reference price standards are considered

manufacturer allowances and retailer pass through rates in a competitive environment a commonly held belief has grocery and mass merchandise retailers gaining power relative to the upstream consumer package goods manufacturers one of the major justifications for this belief is that manufacturers are now giving retailers more side payments such as trade allowances slotting allowances etc however a number of researchers have shown that these concessions have not translated into increased profit for the retailer relative to the manufacturer this paper explores via an analytic model why one might see retailers getting concessions from the manufacturer without being able to translate them into high profits we do this by representing the interaction between the channel members as a one period profit maximizing game where manufacturers decide on how large a side payment i e a concession to give to each retailer and retailers decide on how much of this side payment to use to promote the manufacturer s product at the heart of our model is a demand function for each product offering i e a specific brand sold by a specific retailer this demand function is linear in own and other s prices but based on empirical evidence is assumed to be nonlinear in the effects of merchandising activities e g short term price discounts better shelf space advertising etc specifically merchandising effects are modeled with a square root function that also acknowledges most short term promotional effects result in brand or store switching versus increase category volume the model is composed of six parameters these are the inherent popularity of the brand at a particular outlet own price sensitivity cross but within the store price sensitivity customer s sensitivity to within store promotion activities customer s sensitivity to between store promotional activities and the degree to which promotional activities yield incremental product category sales we use our underlying demand formulation to find the equilibrium solution to the full information stackelberg leader game for different store and brand loyalty environments as captured by our six parameters these parameters are chosen based on empirical evidence to span possible market conditions that each channel member might have our findings and modeling efforts should be of interest to analytic channel modelers and scholars interested in the mass merchandising and grocery store industries for a theoretical point of view we build upon the case 4 model of lee and staelin 1997 to allow for promotional activities from a substantive point of view we show that manufacturers will freely give retailers side payments even though they know these retailers will pocket a substantial portion of this concession moreover we identify conditions within our model that lead to larger allowances lower pass through rates and lower retail profits outcomes that are compatible with recent industry trends in addition we highlight the difference in effect on profits prices etc of changes in consumers sensitivity to inter store differences in storewide merchandising activities one of the more counter intuitive results of these analyses is that it is in the manufacturer s best interest to help retailers increase their spatial monopoly by decreasing consumers tendency to cross store shop because of merchandising activities

preference structures property rights and paired comparisons the method of paired comparisons was used to determine the structure of survey participants value expressions for australian native forests the same participants were also surveyed using the contingent valuation method cvm data from the paired comparisons were used to construct preference maps which enabled identification of participants whose value expressions were structurally incompatible with economic welfare theory in particular those participants who expressed their values according to lexicographic preferences for some of these participants cvm results did not provide appropriate measures of wtp the surveys also demonstrated the importance of allowing participants own views on property rights to dictate the valuation context offered

are sale signs less effective when more products have them we analyze data from a variety of sources including historical data from a women s clothing catalog a field study in that catalog survey responses to catalog stimuli and grocery store data for frozen juice toothpaste and tuna the analysis yields three conclusions first sale signs are less effective at increasing demand when more items have them second total category sales are maximized when some but not all products have sale signs third placing a sale sign on a product reduces the perceived likelihood that the product will be available at a lower price in the future but the effect is smaller when more products have sale signs by ruling out alternative hypotheses the findings suggest that moderation of the sale sign effect is in part due to reduced credibility when they are used on more products the credibility argument is motivated in part by a recent paper that presented an equilibrium model predicting that customers who lack knowledge of market prices rely on point of purchase sale signs to help evaluate posted prices anderson and simester 1998 the model predicts that sale signs increase demand but that the increase is smaller when more products have them this moderating effect regulates how many sale signs stores use and makes customer reliance on these cues an equilibrium strategy to evaluate whether the number of sale signs moderates their effectiveness we compare demand for items with sale signs when varying the number of sale signs on other products for this comparison we use two datasets describing demand for products in a women s clothing catalog the first dataset describes customer orders for the same set of items across three sequential issues of the catalog the second dataset is a field test conducted by mailing different versions of the catalog to randomly selected customer samples reassuringly although the datasets do not share the same limitations the findings are consistent and indicate that sale signs are less effective when more products have them in addition to the credibility explanation there are at least two alternative explanations for this result first using a sale sign to make a product more attractive may lead to substitution of demand from other sale items within a store and so demand may vary even if there is no change in the credibility of the sale signs to discriminate between the substitution and credibility explanations we evaluate whether total category demand is maximized when some but not all products in the category have sale signs the credibility explanation implies that adding another sale sign will eventually decrease total category sales when many items already have sale signs in contrast if adding a sale sign to an item leads solely to substitution from other products within or outside the category we will not observe a decrease in total category demand we test the total category sales prediction using grocery store scan data describing total category demand for frozen juice toothpaste and canned tuna the findings reveal that in all three categories there is a significant reduction in aggregate demand a second alternative explanation is that sale signs focus customer attention on products with these cues distinguishing between the attention and credibility explanations is a difficult task they both imply that sale signs deliver less information when there are too many sale signs the credibility argument predicts that this occurs because the signs are noticed but not believed the attention explanation predicts that the signs are less likely to be noticed when attention is diluted by a large number of sale signs to discriminate between the credibility explanation and this attention effect we use survey measures to evaluate a third hypothesis this hypothesis predicts both that placing a sale sign on a product reduces the perceived likelihood that the product will be available at a lower price in the next period and that this effect is smaller when more items have them in an attempt to control for the attention effect we focus subjects attention on a set of focal items under these conditions it is unlikely that subjects overlook sale signs on these items more important the likelihood of overlooking sale signs on the focal items is unlikely to depend on how many other items also have sale signs the results confirm both that the presence of a sale sign reduced subjects expectations that an item would be available at a lower price in the future and that this effect is smaller when more items have sale signs

anomalies and stated preference techniques a framework for a discussion of coping strategies this paper introduces a symposium on the issue of how stated preference sp research can best cope with anomalies i e systematic deviations from the predictions of standard economic theory in survey responses it proposes a framework for constructive debate recognising i the legitimate aspirations of sp research ii the relevance of evidence from sources other than best practice sp and iii the precautionary value of investigating strategies for coping with suspected anomalies even if questions about the robustness of anomalies have not been finally resolved five alternative coping strategies discussed in more detail in the symposium are briefly introduced

inferred vs stated attribute non attendance in choice experiments a study of doctors prescription behaviour abstract it is increasingly recognised that respondents to choice experiments employ heuristics such as attribute non attendance ana to simplify the choice tasks this paper develops an econometric model which incorporates preference heterogeneity among respondents and allows the probability of non attendance to depend on the respondents stated non attendance we find evidence that stated ana is a useful indicator of the prevalence of non attendance in the data contrary to previous papers in the literature we find that estimates of marginal rates of substitution derived from models which account for ana are similar to the standard logit estimates

incorporating discontinuous preferences into the analysis of discrete choice experiments data from a discrete choice experiment on improvements of rural landscape attributes are used to investigate the implications of discontinuous preferences on willingness to pay estimates using a multinomial error component logit model we explore differences in scale and unexplained variance between respondents with discontinuous and continuous preferences and condition taste intensities on whether or not each attribute was considered by the respondent during the evaluation of alternatives results suggest that significant improvements in model performance can be achieved when discontinuous preferences are accommodated in the econometric specification and that the magnitude and robustness of the willingness to pay estimates are sensitive to discontinuous preferences

reservation price as a range an incentive compatible measurement approach abstract drawing from the literature on buyers uncertainty in preference and product knowledge the authors suggest and empirically test the proposition that a consumer s reservation price for a product is more meaningfully and accurately represented as a range than as a single point given this conceptualization they propose an approach for incentive compatible elicitation of a consumer s reservation price range icerange that builds on becker degroot and marschak s 1964 point of purchase method two empirical applications of the approach provide an assessment of its practicality and its predictive performance relative to current methodologies for reservation price elicitation the results demonstrate that the proposed method significantly outperforms the benchmark approaches in terms of predictive validity and yields valuable incremental information about uncertainty in product valuation

the influence of ethical attitudes on the demand for environmental recreation incorporating lexicographic preferences abstract this article examines the relationships between different ethical attitudes toward environmental quality and the use values obtained from the environment in particular we consider individuals who have duty based ethical attitudes that lead to lexicographic preferences for environmental quality we show that individuals with duty based ethical attitudes have recreation demand functions that are kinked exhibiting perfectly inelastic behavior over some range of income however the kinks cannot be identified from typical cross sectional data and to the extent that observed recreation demand for these individuals differs from those with neoclassical preferences such differences could be captured empirically through a proxy variable that measures ethical attitudes a more fundamental issue is that changes in welfare for duty based individuals cannot be determined from their estimated demand function while an exogenous rise in environmental quality is likely to increase the demand for recreation by these individuals additional recreation is not the reason for an improvement in well being an empirical model to identify the effect of ethical attitudes on recreation is illustrated using survey data on stated preferences for visits to urban parks

welfare and market access effects of piecemeal tariff reform abstract we study the link between import volume and welfare due to liberalization we confine our attention to the small country case and to unilateral tariff reductions our results indicate that increased import volume associated with tariff reductions is neither necessary nor sufficient for welfare improvement to occur we show that in general both import value and welfare cannot fall moreover if the excess demand for exported goods does not respond to changes in the prices of imported goods the value of imports and welfare must move in opposite directions

estimating search benefits from path tracking data measurement and determinants we study consumer search behavior in a brick and mortar store environment using a unique data set obtained from radio frequency identification tags which are attached to supermarket shopping carts this technology allows us to record consumers purchases as well as the time they spent in front of the shelf when contemplating which product to buy giving us a direct measure of search effort we estimate a linear regression of price paid on search duration in which search duration is instrumented with a search cost shifter we show that this regression allows us to recover the marginal return from search in terms of price at the optimal stopping point for the average consumer our identification strategy and coefficient interpretation are valid for a broad class of search models and we are hence able to remain agnostic about the details of the search process such as search order and search protocol we estimate an average return from search of 2 10 per minute and explore heterogeneity across consumer

trade and tax reforms in a cash in advance economy we examine the effects of both tariff only and coordinated trade tax reforms on market access government revenue and welfare for a small monetary economy under the assumption that a certain fraction of purchases of each good must be financed with cash held in advance we show that if the cash requirement ratio in the exportable sector is greater than that in the importable then contrary to previous results i a uniform radial reduction of tariffs has ambiguous effects on both welfare and market access ii tariff and consumption tax reforms that leave consumer prices unchanged may be more efficient in improving market access and welfare than a reform that involves only tariffs and iii export and production tax reforms that keep producer prices unchanged may be welfare deteriorating

inducing patterns of correlation and substitution in repeated logit models of recreation demand repeated logit models are among the most commonly applied methods for modeling seasonal recreation demand in this article we examine the capabilities of the repeated nested logit and repeated mixed logit models to capture patterns of error correlation and demand substitution particular attention is paid to the use of the mixed logit framework to generalize the strong assumptions on correlation patterns across sites and choice occasions imbedded in the nested logit model we examine the implications for the range of price elasticities allowed in both models based on the implied correlation structures copyright 2002 oxford university press

results oriented versus rules oriented trade policies a theoretical survey this paper surveys the recent literature on results oriented versus rules oriented trade policies after presenting a simple setting capturing the basics of results oriented markets access schemes we discuss extensions which have been or might be developed in this line of research in particular we investigate how the use of simple costly verification of information models might be fruitfully applied to analyze the incentives for countries to choose between results oriented and rules oriented trade policies

market access and welfare is there a conflict well known tariff reform rules that are guaranteed to increase welfare will not necessarily increase market access while rules that are guaranteed to increase market access will not necessarily increase welfare the present paper proposes a new set of tariff reforms that can achieve both objectives at the same time

a retailer promotion policy model considering promotion signal sensitivity recent research suggests that the signal e g sign or marker with a point of purchase promotion will stimulate a significant sales increase regardless of whether or not that signal is accompanied by a price cut this paper develops a model of retailer profitability that incorporates this promotion signal sensitivity in a field test the profitability of the promotion policy prescribed by this model is compared to the profitability of two other promotion policy setting paradigms a model based policy that does not consider promotion signal sensitivity and one prescribed by industry experts the test results support the proposed model its policy generates 11 more category profit per unit than the model based policy and 12 more than the industry experts implications for retailers and future research are discussed

lexicographic preferences in contingent valuation a theoretical framework with illustrations this paper considers some implications of l ordering an incommensurable preference model proposed in earlier cvliterature the structure and existence of inverse demand functions is shown to be a function of three elements the relationship between goods and wants wta wtp formats and the endowment of the good in a many to many relationship uncompensated and even compensated inverse demand functions may exist whereas a one to one relationship implicitly assumed in earlier literature does not necessarily produce either an illustration is provided in support of the theoretical framework especially the hypothesis that one to one relationship and high share of cv responses revealing lexicographic preferences are correlated

signaling strategies in competitive interaction building reputations and hiding the truth abstract the authors develop a conceptual framework of how managers interpret competitors signals over time in various market contexts from the framework the authors generate hypotheses about the relative effectiveness of signaling strategies used by firms in different market contexts the authors conducted two empirical studies involving a repeated entry pricing game to test the hypotheses the results of study 1 show that the entrant s perceptions of the aggressiveness of the incumbent depend on the focus and strength of the incumbent s signals the results of study 2 show that the strength of the entrant s responses to the incumbent s signals depends on the incumbent s use of bluffs and the cost of information about the factors driving the incumbent s signals the implications of these findings for how firms should signal to achieve such strategic objectives as revealing or concealing information developing a desired reputation and influencing competitors responses over time are discussed the au

semiparametric analysis to estimate the deal effect curve abstract the marketing literature suggests several phenomena that may contribute to the nature of the relationship between sales and price discounts these phenomena can produce complex nonlinearities and interactions in the deal effect curve that are best captured with a flexible approach because a fully nonparametric regression model suffers from the curse of dimensionality the authors propose a semiparametric regression model store level sales over time are modeled as a nonparametric function of own and cross item price discounts and a parametric function of other predictors the authors compare the predictive validity of the semiparametric model with that of two parametric benchmark models and obtain superior performance the results for three product categories indicate threshold and saturation effects for both ownand cross item temporary price cuts the authors also find that the nature of the own item curve depends on other items price discounts comparisons with restricted model specification

do hypothetical and actual marginal willingness to pay differ in choice experiments application to the valuation of the environment abstract in this paper we test the validity of choice experiments with donations for environmental projects in particular we test whether or not there are differences in preferences between a hypothetical and an actual choice experiment our experiments indicate no differences in addition internal tests of validity indicate transitive and stable preferences in both experiments although there are some indications of possible learning effects during the experiment

the effect of discount frequency and depth on consumer price judgments the intensity of price discounting by retailers and manufacturers raises important questions about consumer price judgments in the extreme discounting can take the form of frequent but shallow discounts or deep but infrequent discounts the research reported here explores the effects of these strategies on consumer estimation of price levels for competing stores and brands in an initial experiment in which subjects made brand choices over time a depth effect was observed that contrasted with the frequency effect found in previous research subsequent experiments identified the conditions under which depth vs frequency characteristics of price data dominate consumers price estimation judgments frequency information is more influential when sets of interstore or interbrand comparative prices exhibit complex and overlapping distributions hence creating processing difficulty in contrast a depth bias occurs when prices have a simpler dichotomous distribution these results place pragmatically meaningful limitations on the influence of frequency information and illustrate the importance of context in determining consumer price judgments in a promotional environment

salesforce compensation plans in environments with asymmetric information in this paper we present a theory of salesforce compensation plans to provide insights into why it may be advantageous for a profit maximizing firm to offer members of its salesforce the opportunity to choose from a menu of compensation plans although such contractual arrangements are not commonly used in the industry they have been introduced and implemented by firms such as ibm and st regis paper as in our previous work on salesforce compensation plans basu lal srinivasan and staelin basu a k r lal v srinivasan r staelin 1985 salesforce compensation plans an agency theoretic perspective marketing sci 4 fall 267 291 we use an agency theory framework in this paper we relax the assumptions of information symmetry and salesforce homogeneity and show the conditions under which it is optimal to offer a menu of compensation plans we also show that even when these assumptions are relaxed there are situations where offering a single plan characterized by basu lal srinivasan and staelin basu a k r lal v srinivasan r staelin 1985 salesforce compensation plans an agency theoretic perspective marketing sci 4 fall 267 291 is still optimal insights gained from the analyses are discussed in the context of an existing compensation scheme

price versus quantity monitoring in an adverse selection context this article explores the relative usefulness of price information over quantity information the main finding is that price monitoring can induce a sales level that is greater than the full information sales level this imposes additional selling costs on the agent and reduces that agent s rents the analysis identifies sufficient conditions for the principal to prefer price monitoring over quantity monitoring business format franchises exhibit many of the features of the setting analyzed here and the article s findings have implications for designing information systems in that sector of the economy

salesforce compensation scheme and consumer inferences we investigate the salesforce compensation strategy of a firm selling products in a category that several consumers find technically sophisticated such as electronics or financial products with legal fine print consumers are unable to judge the value difference between a baseline product and a product upgrade with add on features while the firm and the salespeople are informed of the value of these features consumers are uncertain thus consumers have to rely on sales assistance to evaluate alternatives the salesperson decision variables include selling effort and whether to oversell the consumer by overclaiming the value of added features because sales revenue depends on both the salesperson s selling effort and consumers valuation of the added features the salesforce incentive scheme which can consist of salary sales commission or consumer satisfaction based commission may induce the short term oriented salesperson to misrepresent the value of the upgrade exaggeration of the value of the added features however results in reduced satisfaction levels leading to lower profits for the firm we show that a salesperson selling products where the value of the upgrade is low prefers to make higher claims when the sales commission rate is sufficiently high we conjecture that consumers aware of the incentive structure facing the salesperson expect the true value of the add on feature to be lower than the claimed value we study the optimal compensation scheme of a firm which has to communicate her true type and retain its salesforce credibility we identify the conditions under which a high upgrade type firm indicates its true value by altering sales commission rate and satisfaction based commission rate

attribute causality in environmental choice modelling when selecting attributes in environmentalchoice modelling studies preference should begiven to those attributes that aredemand relevant policy relevant andmeasurable the use of these criteria willoften result in a short list of environmentalattributes of which some are causally related the inclusion of attributes that have a cause effect relationship may stimulate somerespondents to seek to understand the causalrelations among attributes in order to assigngreater meaning to the alternatives andpotentially simplify the decision makingprocess this may have implications for theweights they assign to each of the attributeswhen identifying the preferred alternatives and subsequently for the implicit prices and orwelfare estimates a test of the impact ofincluding an attribute that causesimpacts on ecosystem health as well as anattribute relating to ecosystem health effectson parameter estimates implicitprices and welfare estimates is conducted twoquestionnaires are developed one with the causal attribute included and one without acomparison of results indicates that when the causal attribute is included in the vector ofchoice attributes the implicit value of asingle endangered species falls by 34 per centwhilst no significant difference is detected inthe parameter estimates importantly however estimates of compensating surplus for a givenpolicy package do not differsignificantly across the two treatments thisimplies that to the extent that the inclusionof a causal attribute reduces the implicitprices for one or more of the effect attributes the associated loss in utility isapproximately offset by the utility nowassociated with the new attribute

how do respondents process stated choice experiments attribute consideration under varying information load the popularity of stated choice sc experiments has produced many design strategies in which researchers use increasingly more complex choice settings to study choice behaviour when the amount of information to assess increases we wonder how an individual handles such information in making a choice defining the amount of information as the number of attributes associated with each choice set we investigate how this information is processed as we vary its complexity four ordered heterogeneous logit models are developed each for an sc design based on a fixed number of attributes in which the dependent variable defines the number of attributes that are ignored we find that the degree to which individuals ignore attributes is influenced by the dimensionality of the sc experiment the deviation of attribute levels from an experienced reference alternative the use of adding up attributes where feasible the number of choice sets evaluated and the personal income of the respondent the empirical evidence supports the view that individuals appear to adopt a range of coping strategies that are consistent with how they process information in real markets and that aligning choice complexity with the amount of information to process is potentially misleading relevancy is what matters copyright 2006 john wiley sons ltd

designing conjoint choice experiments using managers prior beliefs abstract the authors provide more efficient designs for conjoint choice experiments based on prior information elicited from managers about the parameters and their associated uncertainty the authors use a bayesian design procedure that assumes a prior distribution of likely parameter values and optimizes the design over that distribution the authors propose a way to elicit prior information from managers and show in monte carlo studies that the procedure provides more efficient designs than the current procedures the authors provide an empirical application in which they elicit prior information on the parameter values and the associated uncertainty from managers here the bayesian design provides 30 50 lower standard errors of the estimates and an expected predictive validity that is approximately 20 higher

position bias in best worst scaling surveys a case study on trust in institutions this paper investigates the effect of physical position on best and worst choices in the bestworst scaling technique although the best worst scaling technique has been used widely in many fields the phenomenon of consumers adoption of processing strategies while making choices has been largely overlooked we examine this issue in the context of consumers perception of trust in institutions to provide information about a new food technology namely nanotechnology and its use in food processing our results show that around half of the consumers used position as a schematic cue when making choices we find the position bias is particularly strong when consumers chose their most trustworthy institution compared to their least trustworthy institution in light of our findings we recommend researchers in the field to be aware of the possibility of position bias when designing best worst scaling surveys we also encourage researchers who have already collected best worst data to investigate whether their data shows such heuristics

quota based compensation plans for multiterritory heterogeneous salesforces we compare quota based salesforce compensation plans with the blss plan i e the optimal curvilinear agency theory based compensation plans proposed in basu lal srinivasan and staelin basu a k r lal v srinivasan r staelin 1985 salesforce compensation plans an agency theoretic perspective marketing sci 4 fall 267 291 a quota plan pays a fixed salary which is supplemented by commission income that is a prespecified fraction of the dollar sales that exceed the quota for a salesforce comprised of multiple salespersons territories we consider a basic quota plan where the commission rate and salary remain the same across salespersons however quotas vary across salespersons territories compared to the blss plan that is individually tailored to each salesperson territory the basic quota plan s total nonoptimality in profit has two components i a shapeinduced nonoptimality arising from the fact that the quota based plan does not have the same optimal shape as the curvilinear blss pl

exploring scale effects of best worst rank ordered choice data to estimate benefits of tourism in alpine grazing commons in many environmental valuation applications standard sample sizes for choice modelling surveys are impractical to achieve one can improve data quality using more in depth surveys administered to fewer respondents we report on a study using high quality rank ordered data elicited with the best worst approach the resulting exploded logit choice model estimated on 64 responses per person was used to study the willingness to pay for external benefits by visitors for policies which maintain the cultural heritage of alpine grazing commons we find evidence supporting this approach and reasonable estimates of mean wtp which appear theoretically valid and policy informative

an integrated choice model incorporating alternative mechanisms for consumers reactions to in store display and feature advertising the marketing literature has suggested two prominent decision mechanisms through which in store display and feature advertising can affect brand choice which i call the price cut proxy effect and the consideration set formation effect the primary objective of this study is to propose an integrated brand choice model that incorporates these two possible behavioral mechanisms which have been shown to work by previous research the model allows consumers to use various combinations of the decision mechanisms with different probabilities and thus enables one to jointly assess the extent to which each effect might occur in actual purchase data and to investigate how consumers might differ in their tendencies to engage in these decision processes by incorporating these likely behavioral mechanisms the proposed model alleviates the problems caused by multicollinearity and produces sensible parameter estimates for the joint effects of promotion vehicles in store display feature ad and price discount which contributes to better managerial decision making

ecosystems contingent valuation and ethics the case of wetland re creation this paper addresses a current issue in environmental valuation namely the extent to which environmental preferences depart from the usual economic paradigm to incorporate some lexicographic elements after a theoretical discussion the paper reviews attempts to explore this question empirically by supplementing contingent valuation analyses with an exploration of the motives behind willingness to pay responses including zero bids and refusals to answer this is followed by the presentation of new evidence investigating respondents willingness to pay for the creation of a wetland taken from 713 personal interviews of the british public 2000 elsevier science b v all rights reserved

the impact of product line extensions and consumer goals on the formation of price image abstract how do vertical product line extensions influence a retailer s price image conventional wisdom suggests that adding an upscale or downscale item to a product line has a directionally consistent impact on price image such that upscale extensions increase price image and downscale extensions decrease price image in contrast this research argues that vertical extensions can have the opposite effect such that upscale extensions can decrease rather than increase price image and vice versa for downscale extensions the authors further propose that the impact of vertical extensions on price image is a function of consumer goals and in particular whether consumers have the intent of browsing or buying the authors test these predictions in a series of five empirical studies that offer converging evidence in support of the proposed theory

an empirical analysis of internal and external reference prices using scanner data single source yogurt data are used to examine whether both internal and external reference prices affect purchase decisions internal reference prices are memory resident prices based on actual fair or other price concepts external reference prices are observed stimuli such as regular prices that stores may display along with a sale price for comparability discrete choice models with variables representing the two types of reference prices are estimated and both types of variables are found to have significant effects on purchase probabilities this suggests that consumers may use multiple reference points in evaluating price in purchase decisions in addition a model using an indicator of a sale price discount explains purchase probabilities as well as one that models the actual discount which suggests that consumers may be reacting to the indication of savings rather than to the amount of the discount

stability of willingness to pay for coastal management a choice experiment across three time periods a key assumption of stated preference methods is that individuals have well formed preferences that are robust over time both the discovered and constructed preference perspectives imply this is not necessarily the case there can be a large situational component to expressed preferences that add to the uncertainty of sampling error most non market valuation studies only collect data from one point in time so the degree of temporal variability cannot be tested test retest studies that provide data from two points in time generally find significant differences in preference structure and willingness to pay wtp in this study we test stability of wtp for beach erosion management using a fully ranked discrete choice experiment survey with not one but two retests over a six month period we find that stability does not improve with the additional repetition as the preference discovery hypothesis implies it might wtp confidence intervals overlap but the models are significantly different at each point in time even after allowing for variation in choice error either the survey did not facilitate sufficient preference discovery or preferences were reconstructed however respondents with high scores of self reported certainty in their choices in the first survey had significantly more stable wtp estimates

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

reformulating the foundations of consumer choice theory and environmental valuation abstract the burgeoning field of environmental valuation has raised serious doubts about the fundamental axioms of consumer choice theory the general validity of the walrasian system and methodological individualism this paper examines these aspects of consumer choice theory paying particular attention to the pioneering contributions of georgescu roegen we argue that evidence from psychology game theory anthropology and contingent valuation surveys reveals a more complex pattern of decision making than that described by neoclassical utility theory we discuss the notions of the invariance of preferences non satiation the principle of complementarity lexicographic preferences and the hierarchy of wants with reference to environmental valuation we also discuss the notion of marginal utility of money the validity of the walrasian system and methodological individualism using scaling concept in hierarchy theory we then address the conflict between theory and reality by introducing a probabilistic binary choice scheme under uncertainty about environmental attributes we argue that these extensions are necessary to account for consumer choices revealed in environmental valuation surveys we conclude with the hope that a reformulation of consumer choice theory based on realistic models of human behavior can be the basis for a viable alternative to neoclassical welfare economics

commercial use of upc scanner data industry and academic perspectives the authors report the findings from an exploratory investigation of the use of upc scanner data in the consumer packaged goods industry in the u s the study examines the practitioner community s view of the use of scanner data and compares these views with academic research forty one executives from ten data suppliers packaged goods manufacturers and consulting firms participated in wide ranging in person interviews conducted by the authors the interviews sought to uncover key questions practitioners would like to answer with scanner data how scanner data is applied to these questions and the industry s perspective regarding the success that the use of scanner data has had in each area the authors then compare and contrast practitioners views regarding the resolution of each issue with academic research this produces a 2 2 classification of each question as resolved or unresolved from the perspectives of industry and academia along the diagonal of the 2 2 issues viewed as unresolved by both groups are important topics for future research issues deemed resolved by both groups are correspondingly of lower priority in the off diagonal cells industry and academics disagree these topics should be given priority for discussion information exchange and possible further research practitioners reported that scanner data analysis has had the most success and been most widely adopted for decision making in consumer promotions i e coupons trade promotions and pricing for example logit and regression models applied to scanner data have revealed very low average consumer response to coupons which has directly led to reduced couponing activity managers also reported high levels of comfort with and impact from analyses of trade promotions and price elasticities while industry views most of the issues in these areas to be resolved academic research raises concerns about a number of practices in common commercial use these include price threshold analysis and trade promotion evaluation using baseline and incremental sales in product strategy advertising and distribution management practitioners reported that the use of scanner data has had more limited development success and impact in the case of new product decisions scanner data use has been slow to develop due to the inherent limitations of historicaldata for these decisions and a heavy reliance on traditional primary research methods in advertising scanner data is widely analyzed with models but confusion among practitioners is very high due to controversies about methods e g what level of data aggregation is best and conflicting results in distribution and retail management scanner data use has tremendous potential but a mixed track record to date thus practitioners view the use of scanner data as unresolved for most issues in product strategy advertising and distribution this view is largely though not entirely consistent with academic research which has only begun to address many of the key questions raised by practitioners in light of the large number of unresolved issues and mixed record of scanner data use to date the authors offer aseries of specific recommendations for immediate and long term research priorities that are likely to have the greatest impact on commercial utilization of upc scanner data topics of immediate priority include price thresholds and gaps baseline and incremental sales base price elasticity competitive reactions measurement of advertising effects management of brand equity rationalization of product assortments and category management long term priorities include a greater emphasis on profitability versus sales or market share developing prescriptive models versus descriptive models and the need for industry standards

designing choice sets for stated preference methods the effects of complexity on choice consistency abstract we vary the complexity of choice sets used in stated preference methods to evaluate the impact on choice consistency we define five measures of complexity that capture either the amount of information or the correlational structure of information in a choice set using these measures as randomly assigned treatments in a large experiment we analyze the consistency of respondents choices using a heteroskedastic multinomial logit model we find that i all of our measures of choice set complexity affect choice consistency ii changes in the correlational structure of information have the largest impact on choice consistency and iii choice complexity significantly distorts welfare estimates our results confirm economists initial worry that moving from contingent valuation to conjoint methods will increase complexity induced choice inconsistency however our analysis also shows that these negative impacts may be mitigated if precautions are taken at the design and estimation stages of stated preference methods

the influence of prior beliefs frequency cues and magnitude cues on consumers perceptions of comparative price data a widespread practice in grocery store advertising is to compare the advertised store s prices to a competitor s prices on multiple items an important but largely unexplored issue is how this information is processed and used in conjunction with prior beliefs to influence price perceptions in our initial studies we manipulated prior beliefs and two data based cues frequency of price advantage and magnitude of price advantage to determine their relative influence on consumer price perceptions results indicate that prior beliefs affected price perceptions but that the frequency cue exerted a dominating influence several follow up studies demonstrate the robustness of this phenomenon across a variety of presentational and instructional conditions

monitoring and incentives in sales organizations an agency theoretic perspective our primary objective in this paper is to analyze a framework that simultaneously examines the role of both monitoring and incentives in the design of sales force control systems previous research has focused exclusively on the role of incentives in directing sales force effort we build on the structure provided by the past work and analyze an agency thoeretic model in which a sales person generates wealth for the firm by expending effort across two dimensions namely internal and external we assume that effort in the internal dimension can be monitored relatively cheaply whereas effort in the external dimension can be monitored only at infinite cost we then analyze the following two scenarios i a pure incentives world where in both effort dimensions are governed through the use of incentive pay and ii a monitoring and incentives world wherein the internal dimension is monitored and the external dimension is governed through the use of incentive pay in addition to modeling the notion of partial monitoring in this manner we also explicitly allow the firm to choose the level of risk aversion desired in its salesperson of course sales people who are relatively risk tolerant command higher reservation wages consequently such sales people are likely to be valuable only to those firms that emphasize incentive pay in their control systems our analysis across the two scenarios helps us to demonstrate the implications and value of introducing monitoring into the control structure specifically we find that monitoring allows the firm to decrease the weight placed on incentives and hire a relatively risk averse salesperson from the salesforce labor market these actions in turn permit the firm to reduce the risk premium and the reservation wage offered to the salesperson in direct contrast to these monetary savings however we find that an adverse side effect of monitoring is that it induces salespeople to overemphasize the effort devoted to the monitored dimension while underemphasizing the effort devoted to the nonmonitored dimension this adverse effect of monitoring notwithstanding we find that the overall benefit of increased monitoring is that it allows the firm to lower the a mount of total compensation paid to the salesperson these analytical findings are consistent with the prescriptions found in the popular business press where it is often stated that compensation plans that emphasize incentive pay are characterized by independence in managing activities lack of monitoring as well as high income potential these findings are also consistent with the popular wisdom that incentive laden compensation plans are generally more appropriate for individuals who are risk takers and entrepreneurial in nature we also delineate the conditions where monitoring can improve on the profits obtained in a pure incentives world specifically we find that monitoring can prove to be most valuable when the importance of internal activities is highand the level of incentives is low finally we conclude by conducting a sensitivity analysis to examine the robustness of our results to the specifications we utilize in our modeling efforts overall we view the main contribution of our research efforts as one of explicitly delineating the tradeoffs associated with the use of monitoring and incentives in the design of salesforce control systems as such our paper should be of interest to academics and practitioners interested in the design of salesforce control systems

aggregation and linearity in the provision of intertemporal incentives we consider the problem of providing incentives over time for an agent with constant absolute risk aversion the optimal compensation scheme is found to be a linear function of a vector of n accounts which count the number of times that each of the n kinds of observable events occurs the number n is independent of the number of time periods so the accounts may entail substantial aggregation in a continuous time version of the problem the agent controls the drift rate of a vector of accounts that is subject to frequent small random fluctuations the solution is as if the problem were the static one in which the agent controls only the mean of a multivariate normal distribution and the principal is constrained to use a linear compensation rule if the principal can observe only coarser linear aggregates such as revenues costs or profits the optimal compensation scheme is then a linear function of those aggregates the combination of exponential utility normal distributions and linear compensation schemes makes computations and comparative statics easy to do as we illustrate we interpret our linearity results as deriving in part from the richness of the agent s strategy space which makes it possible for the agent to undermine and exploit complicated nonlinear functions of the accounting aggregates

neural antecedents of a random utility model abstract for over a decade economists have sought to identify neural antecedents for economic theories more recently neuroeconomic work has sought to predict consumer choice using brain activations witnessed in non choice visual appraisals this paper combines these two emerging strains of inquiry using functional magnetic resonance imaging fmri data observed when consumers view a quality differentiated food product labeled with different attributes we seek to determine the predictive validity of the random utility model rum often used in economic studies of consumer choice our fmri data consist of changes in blood flow to the ventromedial prefrontal cortex a brain region previously associated with value formation observed when people saw low price and high labels and labels indicating high or low quality we couple the fmri data with data on 28 non hypothetical choices made by each participant which pitted higher priced higher quality good vs a lower priced lower quality good we find little evidence of a systematic difference in activation in brain areas thought to be associated with value formation when viewing high vs low levels of attributes prices and quality however differences in neural blood flow across participants related to quality but not price is significantly related to subsequent consumer choice both in and out of sample providing some qualified neuroeconomic support for the attribute based rum

when do price promotions affect pretrial brand evaluations the authors investigate the conditions in which price promotions affect pretrial brand evaluations a price promotion is theorized to be informative about brand quality when it stands out because i

monitoring choice task attribute attendance in nonmarket valuation of multiple park management services does it matter land management in alpine parks provides multifunctional services to separate groups of users choice experiments can be used to derive estimates of value for different management attri butes however little research has been conducted on how frequently respondents ignore attributes used to describe policy management scenarios we fill this gap using an approach that identifies and compares both serial and choice task attribute nonattendance addressing five different visitor types our results indicate that accounting for choice task nonatten dance significantly improves model fit and yield estimates of marginal willingness to pay with a more plausible pattern of signs and greater efficiency jel q24 q51 i introduction the effects of park management policies on outdoor recreation are increasingly coming under public scrutiny alpine park land is among the most valuable land in terms of outdoor recreation park manage ment decisions are often controversial be cause of differences between objectives pursued by conservationists and the tourist industry parkland management agencies find it increasingly difficult to fund all the services needed to facilitate the ever broad ening variety of outdoor recreation activi ties this is further exacerbated by the increasing expectations for high quality recreational experiences by a population of recreationists with a heightened sensitivity to environmental and conservation issues such a situation widens the scope for multiattribute nonmarket valuation meth ods especially for those methods capable of capturing and modeling the preferences of heterogeneous visitors who seek to pursue a variety of activities in the land under study our research reports the results of a study designed to address attribute nonattendance henceforth abbreviated as an a which despite being quite a common decision heuristic has only recently begun to be explored by analysts with this decision heuristic respondents ignore some of the described attributes in their evaluation of alternatives within a given choice task they hence act as if a zero weight were assigned to the ignored attributes in the utility of the respective alternatives we study this issue by using a well known statistical model of discrete choice the multinomial logit mnl model this random utility model is often used for the purpose of multi attribute nonmarket valuation but the effects of accounting for an a are still rela tively unexplored information on an a is commonly collected by questioning each respondent at the end of the sequence of choice tasks respondents are asked to list those attributes that they feel they have

causes and consequences of lexicographic choices in stated choice studies abstract stated choice sc methods and other choice experiments are now becoming increasingly popular for the valuation of environmental goods this paper shows that lexicographic choices lcs in an sc task or other types of choice experiments do not imply that the respondent has lexicographic preferences lcs may be a result of i study designs where differences between the alternatives are too great and ii simplification of the choice task a traditional approach that investigates motives for lexicographic choices mainly as a result of lexicographic preferences may therefore fail to reveal the whole motive range study designs that cause lcs whether such choices actually are based on non compensatory choices i e genuine lexicographic preferences or strategic behaviour or compensatory choices provide less information about preferences however providing they are not totally dominant such choices are not normally a serious modeling problem it is argued that simplification is a consequence of respondents differing abilities to choose such lcs contribute to the larger variances of sc data relative to less cognitively demanding valuation methods and might therefore have a significant impact on the implied valuation of non market goods if they are not handled in the analysis in data collection we should use survey designs that collect more signals and less noise and in data analysis we should use models that can separate signals from noise however there is obviously a limit to the amount of noise which can be separated from signals in a model and therefore how much noise such models can tolerate and still produce useful valuation estimates for the goods under consideration for further investigation of such limits a direct test procedure that can investigate whether each respondent has completed the task in a compensatory manner like the one presented in the current study is valuable

the impact of choice inconsistencies in stated choice studies a new test procedure revealing mutuallyinconsistent choices has been developed andapplied to stated choice data our analysisshows that inconsistent choices commonly occurin several stated choice tasks an applicationof the test to the norwegian value of timestudy data shows that failing to excludeinconsistent choices resulted in asubstantially higher value of time theinconsistent choices were made by less educatedparticipants as the tasks were undertaken inthe easy context of choosing travelalternatives with three attributes practitioners of more complex and cognitivedemanding designs should be particularilyconcerned with these results

import now an analysis of market share voluntary import expansions vies abstract proponents claim that voluntary import expansions vies increase foreign access to a domestic market while increasing competition and reducing prices using a bertrand model i show that a vie produces exactly the opposite results a vie that increases the market share of imports above the prevailing level results in higher prices in the domestic market this result holds even when the domestic market is assumed to be protected by a tariff type barrier prior to the imposition of a vie a vie and an equivalent import subsidy are shown to have opposite effects on prices

understanding reference price shoppers a within and cross category analysis abstract the authors attempt to draw profiles of reference price shoppers specifically the authors study how selected factors that affect brand choice are correlated with consumer sensitivity to gains and losses with respect to internal reference prices they also study the interaction between sociodemographics and gain and loss sensitivity furthermore the authors analyze cross category correlations in gain and loss sensitivity to shed light on their individual and category specific characters in three categories the results show significant heterogeneity in loss sensitivity among consumers and indicate that loss sensitivity is greater and more heterogeneous than gain sensitivity across categories the results show that loss sensitive shoppers are less influenced by past brand use and that both loss and gain sensitive shoppers more sensitive to price display and feature than the average consumer loss sensitive households tend to be larger and their heads are less likely to be fully employed

compensation plans for single and multi product salesforces an application of the holmstrom milgrom model the agency theory approach to understanding salesforce compensation plans is modified to incorporate the intratemporal nature of the salesperson s effort rate decision i e the decision about the effort rate at any given point in time potentially depends upon the sales performance up to that point in time in the accounting period under the assumptions considered in this paper holmstrom and milgrom 1987 have shown that the optimal compensation plan is linear in total sales over the accounting period the comparative statics results obtained here corroborate most of the corresponding results in the salesforce compensation literature moreover we derive many additional results not available in the literature it is demonstrated that the commission income as a fraction of total compensation goes up with an increase in the effectiveness of the sales effort or an increase in base sales on the other hand the salary component of the total compensation goes up with increases in uncertainty absolute risk