was the emergence of the international gold standard expected evidence from indian government securities abstract the emergence of the gold standard has for a long time been viewed as inevitable we analyze agents expectations using the spread between gold and silver bonds issued by the indian government we find that bimetallism was credible until france surprised markets by suspending domestic operation of bimetallism triggering a run away from silver thereafter markets began demanding a premium to hold silver bonds indicating their belief that silver would depreciate in the future as more countries moved on gold

where do markets come from production markets have two sides producers are a fully connected clique transacting with buyers as a separate but aggregated clique each producer is a distinctive firm with a distinctive product each side continually monitors reactions of the other through the medium of a joint social construction the schedule of terms of trade each producer is guided in choice of volume by the tangible outcomes of other producers not by speculation on hypothetical reactions of buyers to its actions each producer acts purely on self interest based on observed actions of all others summarized through a feedback process the summary is the terms of trade schedule which reduces to constant price only in limiting cases the market emerges as a structure of roles with a differentiated niche for each firm explicit formulae both for firms and for market aggregates are obtained by comparative statics methods for one family of assumptions about cost structures and about buyers evaluations of differentiated products not just any set of firms can sustain terms of trade with any set of buyers there prove to be three main kinds of markets and three sorts of market failure within a parameter space that is specified in detail one sort of market paradox has a madison avenue flavor another is more conventional grind and a third crowded is a new form not included in any existing theory of markets current american industrial markets are drawn on for 20 illustrations of which three are presented in some detail inequality in firms market shares measured by gini coefficients is discussed

a resource exchange theory analysis of consumer behavior marketing has been described as an exchange between two or more social units a psychological exchange theory developed by foa and foa 1974 was used to examine a the structure underlying six different resource categories i e love status information money goods and services and b the functional relations among these six resource categories i e the patterns of exchange the economic concept of resource constraint scarcity was also incorporated into the exchange process the results were basically consistent with both the structural and functional relations derived from foa s theory moreover resource scarcity was found to affect the types of resources an individual was likely to give in an exchange

analysis of new product diffusion using a four segment trial repeat model a four segment trial repeat model is developed to model sales of a frequently purchased product in the early stage of the product s life cycle the model can be calibrated using aggregate data alone two versions of the model one emphasizing the competitive aspect of marketing communications and another emphasizing the informative aspect are estimated from data on 21 newly launched pharmaceutical products the model provides valuable diagnostics such as an early estimate of the long run market share of the new product a decomposition of total sales into trial sales due to marketing activities trial sales due to word of mouth and repeat sales the changing composition of the trial market and repeat market over time and the time when the trial market is expected to be saturated in addition the effectiveness of the entrant s marketing efforts word of mouth communication and buyers trial experience are analyzed with the model a cross sectional analysis based on the empirical estimation results of our model reveals interesting insights into product introduction strategies we find that 1 the effectiveness of the firms communication activities on trial is related mainly to product quality attributes and market growth whereas that of word of mouth is associated with product class characteristics and market competitiveness and 2 the effect of product trial on repeat purchases is related mainly to product quality attributes and various market characteristics such as size growth competitiveness and familiarity

financing as a marketing strategy this paper investigates the issues concerning a film producer that finances production costs not only by the conventional funding from an institutional investor but also by internet funding financing through the internet from so called netizen investors in internet funding netizen investors engage in word of mouth activities assuming that information asymmetry exists between the producer and investors we investigate how the internet funding size varies with the word of mouth effect the monitoring effect of the institutional investor and the bargaining power of the producer over investors when the producer has no bargaining power the internet funding size is determined by balancing the word of mouth effect with the monitoring effect by the institutional investment if there is no word of mouth effect there may be no internet funding because netizen investors interpret internet funding as an indicator of a negative profit when the producer has high bargaining power full internet funding is possible if the information asymmetry of the film quality is resolved we discuss how information asymmetry can be resolved by the monitoring of the film quality the producer s reputation or the insurance on investment returns our model helps to capture several interesting aspects of internet funding in the korean film industry

the efficiency of the dollar sterling gold standard 1890 1908 the gold standard in 1890 1908 period was efficient by any criterion the number of gold point violations was small violations did not persist gold movements occurred in the predictable profitable direction in response to violations and the mean absolute exchange rate for 1881 1900 was at exactly half the average of the gold points the actions of the bank of england and u s treasury in manipulating gold points were consistent with the rules of the game and in fact facilitated the efficiency of the gold standard in contrast the operations of banking syndicates were of a nature to generate inefficiencies but the evidence is that they did not have this effect

structure cooperation and the flow of market information this article explores the potential impact of individual consumer decisions to transmit or withhold word of mouth information on the flow of information in a market information flow is examined in networks composed of graphs and nodes where graphs represent channels that foster information flow and nodes represent sentient decision makers who can potentially impede or foster information flow we assert that actors in embedded markets first judge the moral hazards imposed by the information they consider for transmission and the social context of transmission and then moderate their decisions to transmit the information in light of these judgements we analyze this process using a modified version of marshall sahlins s social exchange theory examine the plausibility of this analysis using two laboratory experiments and explore the consequences of this behavior at the aggregate level using a computer simulation our view highlights the importance of the interplay of individuals and their social context for understanding word of mouth processes

zooming in self emergence of movements in new product growth in this paper we propose an individual level approach to diffusion and growth models by zooming in we refer to the unit of analysis which is a single consumer instead of segments or markets and the use of granular sales data daily instead of smoothed e g annual data as is more commonly used in the literature by analyzing the high volatility of daily data we show how changes in sales patterns can self emerge as a direct consequence of the stochastic nature of the process our contention is that the fluctuations observed in more granular data are not noise but rather consist of accurate measurement and contain valuable information by stepping into the noise like data and treating it as information we generated better short term predictions even at very early stages of the penetration process using a kalman filter based tracker we demonstrate how movements can be traced and how predictions can be significantly improved we propose that for such tasks daily data with high volatility offer more insights than do smoothed annual data

peer effects in the diffusion of solar photovoltaic panels social interaction peer effects are recognized as a potentially important factor in the diffusion of new products in the case of environmentally friendly goods or technologies both marketers and policy makers are interested in the presence of causal peer effects as social spillovers can be used to expedite adoption we provide a methodology for the simple straightforward identification of peer effects with sufficiently rich data avoiding the biases that occur with traditional fixed effects estimation when using the past installed base of consumers in the reference group we study the diffusion of solar photovoltaic panels in california and find that at the average number of owner occupied homes in a zip code an additional installation increases the probability of an adoption in the zip code by 0 78 percentage points our results provide valuable guidance to marketers designing strategies to increase referrals and reduce customer acquisition costs they also provide insights into the diffusion process of environmentally friendly technologies

word of mouth communication and percolation in social networks this paper develops a model of demand pricing and advertising in the presence of social learning via word of mouth communication between friends in the model consumers must receive information about a monopolist s product in order to consider purchasing it the presence of word of mouth is not sufficient for demand to be more elastic and prices to be lower compared to an informed population i derive the comparative static results of connectivity mean preserving spread of friendships and clustering of friends on prices the optimal targets for advertising are not generically the individuals with the most friends jel l12 l14 a fundamental issue for economists is understanding the process by which demand is formed through social learning by consumers this article develops a framework based on random graphs for understanding the ways social learning via

the effects of shared consumption on product life cycles and advertising effectiveness the case of the motion picture market abstractconsumers frequently consume hedonic products together with other consumers and derive value from this shared experience this article investigates the impact of shared consumption a type of social influence that determines the enjoyment of joint experiences in the context of a typical hedonic product movies the authors argue that this type of influence has important consequences for the diffusion curves of hedonic goods that are consumed together and the effectiveness of advertising in generating launch and postlaunch sales an empirically validated agent based model simulates the u s motion picture market with new movies launching competing and exiting the agent based model serves as a means to demonstrate the essential role of shared consumption for explaining movie life cycles and tests how advertising expenditures accelerate and or acquire movies demand in markets with varying levels of shared consumption the results provide key theoretical insights for the new product diffusion of

alternative supply chain production sales policies for new product diffusion an agent based modeling and simulation approach abstract applying agent based modeling and simulation abms methodology this paper analyzes the impact of alternative production sales policies on the diffusion of a new generic product and the generated npv of profit the key features of the abms model that captures the marketplace as a complex adaptive system are i supply chain capacity is constrained ii consumers new product adoption decisions are influenced by marketing activities as well as positive and negative word of mouth wom between consumers iii interactions among consumers taking place in the context of their social network are captured at the individual level and iv the new product adoption process is adaptive conducting over 1 million simulation experiments we determined the best production sales policies under various parameter combinations based on the npv of profit generated over the diffusion process the key findings are as follows 1 on average the build up policy with delayed marketing is the preferred policy in the case of only positive wom as well as the case of positive and negative wom this policy provides the highest expected npv of profit on average and it also performs very smoothly with respect to changes in build up periods 2 it is critical to consider the significant impact of negative word of mouth in choosing production sales policies neglecting the effect of negative word of mouth can lead to poor policy recommendations incorrect conclusions concerning the impact of operational parameters on the policy choice and suboptimal choice of build up periods

a new product growth for model consumer durables this article originally appeared in management science january 1969 volume 15 number 5 pp 215 227 published by the institute of management sciences a growth model for the timing of initial purchase of new products is developed and tested empirically against data for eleven consumer durables the basic assumption of the model is that the timing of a consumer s initial purchase is related to the number of previous buyers a behavioral rationale for the model is offered in terms of innovative and imitative behavior the model yields good predictions of the sales peak and the timing of the peak when applied to historical data a long range forecast is developed for the sales of color television sets

reading a target zone in keynes s indian currency and finance the gold exchange standard in india 1893 1913 was characterized by a narrow target zone for the exchange rate a wide annual range for the international interest rate differential and negative seasonal autocorrelation in interest rates these properties are consistent with a standard target zone model in which fundamentals are negatively autocorrelated on a markov chain

optimal referral bonuses with asymmetric information firm offered and interpersonal incentives referral bonuses in which an existing customer gets an in kind or cash reward for referring a new customer are a popular way to stimulate word of mouth in this paper we examine key firm decisions about such bonuses others have studied referral bonus programs a key difference is that we study the role of recommendations not just in spreading awareness as they do but also in providing assessments we start with the idea that people have a variety of reasons for making product recommendations including placing a value on a friend s outcome with a product they recommend we apply that idea in a context of asymmetric information a customer combines his knowledge about the product and his familiarity with friends tastes making him more informed than the friends thus the recommendation is a signal about the value of the product to the friend in this setting we consistently find that the greater the concern for others outcomes the higher the referral bonus should be as long as the firm cannot more efficiently motivate recommendations with a lower price moreover if price is the more efficient lever the optimal bonus is zero and the optimal price is low we also show that greater concern tends to reduce firm profit and in some cases actually reduces consumer welfare as well

hotelling bertrand duopoly competition under firm specific network effects abstract social pressure plays a crucial role in consumer choices the impact of network social effects has also been largely recognised in the context of market competition in this paper we consider a duopoly where competing firms are differentiated solely by the level of social or network externality they induce on consumers perceived utility we fully characterise nash equilibria in locations prices and market shares under a scenario of weak social externality firms opt for maximum differentiation and the firm with the highest social recognition enjoys a relative advantage in terms of profit this outcome is not the only possible we formally prove that large values of social recognition may lead to adverse coordination among consumers and move the strongest firm out of the market with positive probability this scenario is related to a pareto inefficient trap of no differentiation

an interpretation of recent research on exchange rate target zones how do exchange rate bands work compared to completely fixed rates between realignments or more precisely what are the dynamics of exchange rates interest rates and central bank interventions within exchange rate bands does the difference between bands and completely fixed exchange rates matter and if so which of the two arrangements is best or more precisely what are the tradeoffs that determine the optimal bandwidth this article will present an interpretation of some selected recent theoretical and empirical research on exchange rate target zones with emphasis on main ideas and results and without technical detail

budget spillovers and fiscal policy interdependence evidence from the states abstract this paper formalizes and tests the notion that states expenditures depend on the spending of similarly situated states we find that even after allowing for fixed state effects year effects and common random shocks among neighbors a state government s level of per capita expenditure is positively and significantly affected by the expenditure levels of its neighbors ceteris paribus a one dollar increase in a state s neighbors expenditures increases its own expenditure by over 70 cents

gifts as economic signals and social symbols gift giving has often puzzled economists especially because efficient gifts like cash or giving exactly what a person asks for seem crass or inappropriate it is shown in a formal game theoretic model that gifts serve as signals of a person s intentions about future investment in a relationship and inefficient gifts can be better signals other explanations for the inefficiency of gift giving are advanced and some stylized facts about gift giving practices are described many of which are consistent with the signaling view of gifts

learning about new technologies through social networks experimental evidence on nontraditional stoves in bangladesh there are few marketing studies of social learning about new technologies in low income countries this paper examines how learning through opinion leaders and social networks influences demand for nontraditional cookstoves a technology with important health and environmental consequences for developing country populations we conduct marketing interventions in rural bangladesh to assess how stove adoption decisions respond to a learning the adoption choices of locally identified opinion leaders and b learning about stove attributes and performance through social networks we find that households generally draw negative inferences about stoves through social learning and that social learning is more important for stoves with less evident benefits in an institutional environment where consumers are distrustful of new products and brands consumers appear to rely on their networks more to learn about negative product attributes overall our findings imply that external information and marketing campaigns can induce initial adoption and experiential learning about unfamiliar technologies but sustained use ultimately requires that new technologies match local preferences

market roll out and retailer adoption for new brands this paper proposes a descriptive model of the spatial and temporal evolution of retail distribution for new packaged goods the distribution model postulates separate processes for local market entry by manufacturers and adoption by retailers given entry of special interest is whether retail adoption occurs along a competitive network with retailers as nodes and overlapping trade areas of these retailers as links the model is calibrated on data covering the introduction of two very successful new brands in the frozen pizza category for these brands manufacturers sequentially enter markets based on spatial proximity to markets already entered spatial evolution and on whether chains in these markets adopted previously elsewhere market selection a retail chain adopts new brands based on the adoption timing of competing chains within its trade territory competitive contagion and on the fraction of its trade area in which the new brand is available trade area coverage the effects of market selection and of trade area coverage create dependencies between market entry and retail adoption because of these dependencies the attraction of a particular market as a lead market depends on its location in the geographic structure of the u s retail trade

economic exchange during hyperinflation historical evidence indicates that hyperinflations can disrupt individuals normal trading patterns and impede the orderly functioning of markets to explore these issues we construct a theoretical model of hyperinflation that focuses on individuals and their process of economic exchange in our model buyers must carry cash while shopping and some transactions take place in a decentralized setting in which buyer and seller negotiate over the terms of trade of an indivisible good since buyers face the constant threat of incoming younger hence richer customers their bargaining position is weakened by inflation allowing sellers to extract a higher real price however we show that higher inflation also reduces buyers search increasing sellers wait for customers as a result the volume of transactions concluded in the decentralized sector falls at high enough rates of inflation all agents suffer a welfare loss

latent homophily or social influence an empirical analysis of purchase within a social network consumers who are close to one another in a social network often make similar purchase decisions this similarity can result from latent homophily or social influence as well as common exogenous factors latent homophily means consumers who are connected to one another are likely to have similar characteristics and product preferences social influence refers to the ability of one consumer to directly influence another consumer s decision based upon their communication we present an empirical study of purchases of caller ring back tones using data from an asian mobile network that predicts consumers purchase timing and choice decisions we simultaneously measure latent homophily and social influence while also accounting for exogenous factors identification is achieved due to our dynamic panel data structure and the availability of detailed communication data we find strong influence effects and latent homophily effects in both the purchase timing and product choice decisions of consumers this paper was accepted by sandra slaughter information systems

the linkage between speculative attack and target zone models of exchange rates in this paper we generalize the target zone exchange rate as model formalized by krugman 1988b to include finite sized interventions in defense of the zone the main contributions of these pages consist of linking the recent developments in the theory of target zones to the mirror image theory of speculative attacks on asset price fixing regimes and in using aspects of that linkage to give an intuitive interpretation to the smooth pasting condition usually invoked as a terminal condition this abstract was borrowed from another version of this item

mixing behavior in cross country diffusion diffusion models represent one of the key successes in marketing science we understand a great deal about what influences and shapes within country diffusion patterns however we understand far less about what influences and shapes cross country or inter country diffusion patterns clearly for firms operating in a truly global environment understanding to what extent prior adoption in one country affects current and consequently future adoption in another country can be an important consideration further understanding how the pattern of interaction across countries impacts the diffusion process can have profound implications for product launch strategies for new durable products in this paper we address the extent to which prior adoption of a new product in one country affects adoption in other countries in particular we investigate the importance of the pattern of interaction what we call mixing across countries in the context of a new product diffusion model more specifically mixing refers to the pattern of communication within and across countries for example do italians communicate only with other italians or do they influence consumers in other countries understanding and empirically estimating how these mixing patterns across countries influence the subsequent diffusion process is the central research objective of this paper while previous research in marketing addressing cross country diffusion has assumed very specific forms of cross country interaction the present study develops and estimates a flexible form of mixing that allows for the simultaneous estimation of mixing patterns across multiple countries in particular we examine the effect of mixing behavior across populations on new product adoption viewing mixing as occurring across a continuum with segregation no mixing at one end and random mixing at the other intermediate forms of mixing lie along this continuum and are called bernoulli mixing in order to produce generalizable results we obtained sales data on four product categories in the european community ec nations vcrs from 1977 1990 microwave ovens 1975 1990 compact disc players 1984 1993 and home computers 1981 1991 for each product data were collected for 10 ec nations great britain germany france italy spain belgium denmark netherlands sweden and austria a diffusion model that incorporates cross country prior adoption cross country mixing patterns and individual country covariates was estimated simultaneously across the 10 countries for each of the four products on the basis of the empirical results we conclude that mixing behavior across segments is an important consideration in new product diffusion specifically the observed pattern of mixing and the strength of cross segment influences are important considerations in allocating the marketing mix during product introduction stages the practical implication of mixing behavior is that if one wishes to understand diffusion in belgium for example it is important to not only know the diffusion parameters in belgium but also those in other ec nations accordingly these results should be of interest to managers responsible for coordinating new product launches across countries and to researchers interested in investigating cross country diffusion issues as an example of the strategic implications of the results we note that under bernoulli mixing future country launches will benefit not only from prior adoption in countries with high overall contact rates but in particular from countries with high rates of contact with other countries although there is some variance across products in general germany france italy and spain are the most gregarious as measured by the rate of contact the results suggest that a strategy of first focusing on germany france italy and spain will maximize adoption in subsequent countries each of these countries tends to have a higher percentage of its contacts with individuals internal to its borders as well as with other countries this suggests that these countries would have relatively quick adoption internally while having a strong influence externally further for countries such as denmark netherlands austria and sweden a higher percentage of their contacts are derived from outside their borders thus seeding the diffusion process by introducing first in germany france italy and spain would benefit later adoption in countries such as denmark netherlands austria and sweden although the strength of the individual country influence varies from product to product this result is generally consistent across the four products

modeling hedonic portfolio products a joint segmentation analysis of music compact disc sales abstract the authors present a framework that enables researchers to differentiate better among a wide array of hedonic products specifically the authors define and discuss characteristics of hedonic portfolio products and offer a joint segmentation model that is appropriate for understanding the sales dynamics of this class of products the model offered in this article can accommodate a large degree of product heterogeneity through product clusters and model covariates the basic premise is that several generic consumer segments exist and remain fixed across all albums and each album or each cluster of similar albums can be viewed as drawing different proportions from each of these underlying segments the authors also allow explanatory variables to have a differential impact on both components of the model that is accelerating purchase rates within a consumer segment and changing the proportions drawn from each consumer segment by each product cluster thereby expanding or contracting the potentia

the optimal quantity of money a reconciliation abstract despite the apparent disagreement of samuelson s 1958 overlapping generations model and townsend s 1980 turnpike model on the optimal quantity of money in both i those endowed at the start with goods prefer a constant money stock and ii those endowed at the start with fiat money prefer deflation

social contagion and income heterogeneity in new product diffusion a meta analytic test standard diffusion models capture social contagion only coarsely and do not allow one to operationalize different contagion mechanisms moreover there is increasing skepticism about the importance of contagion and as has long been known s shaped diffusion curves can also result from heterogeneity in the propensity to adopt we present hypotheses about conditions under which specific contagion mechanisms and income heterogeneity are more pronounced and test these hypotheses using a meta analysis of the q p ratio in applications of the bass diffusion model the ratio is positively associated with the gini index of income inequality in a country supporting the heterogeneity in thresholds interpretation the ratio also varies as predicted by the gamma shifted gompertz diffusion model but the evidence vanishes after controlling for national culture as to contagion the q p ratio varies with the four hofstede dimensions of national culture for three of them in a direction consistent with the social contagion interpretation furthermore products with competing standards have a higher q p ratio which is again consistent with the social contagion interpretation finally we find effects of national culture only for products without competing standards suggesting that technological effects and culturally moderated social contagion effects might not operate independently from each other

a gravity based multidimensional scaling model for deriving spatial structures underlying consumer preference choice judgments in multidimensional unfolding multidimensional scaling mds procedures the predicted utility of a brand for a consumer is inversely related to the distance between that consumer s ideal point and the brand position in the derived space most mds models treat all brands the same regardless of their respective market share in many product categories however consumer preferences are heavily influenced by the size of the existing market share i e the brand mass this article presents two versions of a new spatial methodology that incorporates the effects of brand as well as consumer mass via a spatial gravity model of consumer utility that is the attraction of a brand for a consumer depends not only on the distance of the brand from a consumer s ideal point but also on the current market size of the brand as well as the consumer purchase pattern and volume one version of the proposed model estimates brand positions and individual ideal points with two way or three way pick any n binary choice data the second version we develop provides the same spatial decomposition for two way or three way metric preference dominance data we also develop a series of nested mds models to estimate test and compare four different model structures with respect to any common data set we illustrate the proposed methodology using an actual commercial application involving physician prescription behavior and examine competing model fits

cryptocurrency adoption with speculative price bubbles this paper marries models of stochastic bubbles and the standard model of product diffusion to study the role of price bubbles in cryptocurrency adoption

nonmonotonic status effects in new product adoption we investigate how the tendency to adopt a new product independently of social influence the recipients susceptibility to such influence and the sources strength of influence vary with social status leveraging insights from social psychology and sociology about middle status anxiety and conformity we propose that for products that potential adopters expect to boost their status both the tendency to adopt independently from others and the susceptibility to contagion is higher for middle status than for low and high status customers applying a nested case control design to the adoption of commercial kits used in genetic engineering we find evidence that status affects i how early or late one adopts regardless of social influence ii how susceptible one is to such influence operating through social ties and iii how influential one s own behavior is in triggering adoption by others the inverse u patterns in i and ii are consistent with middle status anxiety and conformity the findings have implications for how to use status to better understand adoption and contagion mechanisms and for targeting customers when launching new products

modeling choice interdependence in a social network this paper investigates how individuals product choices are influenced by the product choices of their connected others and how the influence mechanism may differ for fashion versus technology related products we conduct a novel field experiment to induce and observe choice interdependence in a closed social network in our experiment we conceptualize individuals choices to be driven by multiattribute utilities and we measure their initial attribute preferences prior to observing their choice interdependence and collecting network information these design elements help alleviate concerns in identifying social interaction effects from other confounds given that we have complete information on choices and their sequence we use a discrete time markov chain model nonetheless we also use a markov random field mrf model as an alternative when the information on choice sequence is missing we find significant social interaction effects our findings show that whereas experts exert asymmetrically gre

new product diffusion with influentials and imitators we model the diffusion of innovations in markets with two segments influentials who are more in touch with new developments and who affect another segment of imitators whose own adoptions do not affect the influentials this two segment structure with asymmetric influence is consistent with several theories in sociology and diffusion research as well as many viral or network marketing strategies we have four main results 1 diffusion in a mixture of influentials and imitators can exhibit a dip or chasm between the early and later parts of the diffusion curve 2 the proportion of adoptions stemming from influentials need not decrease monotonically but may first decrease and then increase 3 erroneously specifying a mixed influence model to a mixture process where influentials act independently from each other can generate systematic changes in the parameter values reported in earlier research 4 empirical analysis of 33 different data series indicates that the two segment model fits better than the standard mixed influence the gamma shifted gompertz and the weibull gamma models especially in cases where a two segment structure is likely to exist also the two segment model fits about as well as the karmeshu goswami mixed influence model in which the coefficients of innovation and imitation vary across potential adopters in a continuous fashion

optimal entry timing in markets with social influence firms routinely face the challenging decision of whether to enter a new market where a firm s strong presence in an existing market has a positive influence the leverage effect on product adoption in the new market but the reciprocal social influence on the existing market is negative the backlash effect in this paper we show that a firm s optimal entry strategy in this situation cannot be characterized by the familiar now or never or now or at maturity strategies proposed in the literature we show that a strong leverage effect does not necessarily provide the justification for a firm to enter a new market and neither should a strong backlash effect necessarily deter a firm from embracing a new market the optimal strategy is predicated on a judicious trade off between the three factors of leverage backlash and patience thus an astute manager can always find the opportune time to enter the new market if she takes into account the dynamic and recursive nature of cross market interaction effects where leverage enhances the backlash but backlash weakens the leverage in a nonlinear dynamic fashion we illustrate that firms stand to benefit from explicit considerations of these effects in deciding whether and when to enter a new market furthermore we explore how the optimal time of entry into the new market relates to the time of peak sales for the existing market demonstrating that depending on the interactive effects of leverage and backlash entry could be optimal either before or after peak sales in the existing market

inflation investment and economic performance the role of internal financing abstract this paper studies a link between inflation and economic activity that is built on two hypotheses first firms mitigate informational frictions in financial markets by accumulating retained earnings over a period of time second firms allocate earnings among three competing uses dividends current investment and the accumulation of internal funds and inflation directly distorts this allocation decision as well as the real value of accumulated internal funds the model predicts that the level of inflation both unanticipated and expected inflation as well as the variability of inflation distort firms internal financing decisions increases frictions in financial markets reduces the level and efficiency of investment and reduces aggregate output the marginal effects of inflation are increasing in the inflation rate

tie strength embeddedness and social influence a large scale networked experiment we leverage the newly emerging business analytical capability to rapidly deploy and iterate large scale microlevel in vivo randomized experiments to understand how social influence in networks impacts consumer demand understanding peer influence is critical to estimating product demand and diffusion creating effective viral marketing and designing network interventions to promote positive social change but several statistical challenges make it difficult to econometrically identify peer influence in networks though some recent studies use experiments to identify influence they have not investigated the social or structural conditions under which influence is strongest by randomly manipulating messages sent by adopters of a facebook application to their 1 3 million peers we identify the moderating effect of tie strength and structural embeddedness on the strength of peer influence we find that both embeddedness and tie strength increase influence however the amount of physical interaction between friends measured by coappearance in photos does not have an effect this work presents some of the first large scale in vivo experimental evidence investigating the social and structural moderators of peer influence in networks the methods and results could enable more effective marketing strategies and social policy built around a new understanding of how social structure and peer influence spread behaviors in society this paper was accepted by alok gupta special issue on business analytics

purchasing behavior in embedded markets this article explores the concept of market embeddedness and its impact on purchasing behavior in a consumer market embeddedness exists when consumers derive utility from two sources simultaneously from attributes of the product and from social capital found in preexisting ties between buyers and sellers this framework is applied to the home party method of direct sales we find that the degree of social capital present as measured by the strength of the buyer seller tie and buyer indebtedness to the seller significantly affects the likelihood of purchase we cannot tell the precise moment when friendship is formed as in filling a vessel drop by drop there is at last a drop which makes it run over so in a series of kindnesses there is at last one which makes the heart run over boswell 1777 1835

financial markets and inflation under imperfect information abstract this paper studies the effects of inflation on the operation of financial markets and shows how the ability of financial intermediaries to distinguish among heterogenous firms is reduced as inflation rises this point is illustrated by presenting a simple model where inflation affects firms productivity in particular productivity differentials narrow as inflation increases this effect creates incentives for risky and less productive firms to behave as high productivity firms at high rates of inflation this may result in financial intermediaries being unable to differentiate among customers