the causes of preference reversal observed preference reversal cannot be adequately explained by violations of independence the reduction axiom or transitivity the primary cause of preference reversal is the failure of procedure invariance especially the overpricing of low probability high payoff bets this result violates regret theory and generalized nonindependent utility models preference reversal and a new reversal involving time preferences are explained by scale compatibility which implies that payoffs are weighted more heavily in pricing than in choice copyright 1990 by american economic association

reconciling the old and new census bureau education questions recommendations for researchers beginning with the 1990 census and the january 1992 current population survey cps the bureau of the census changed the emphasis of its educational attainment question from years of education to degree receipt using a matched sample from the 1991 and 1992 march cps this article addresses how to reconcile the old and new questions the effects of those methods on the estimated return s to education are then examined both the estimated linear return and the estimated college high school wage differential are slightly larger using information from the new question

two models of bid taker cheating in vickrey auctions vickrey second price sealed bid auctions have attractive theoretical properties but standard first price sealed bidding is far more common explanations of the rarity of vickrey auctions rely on concern about revelation of private information and on fear of cheating the authors present two models of bid taker cheating a static game theoretic model and a reputation based model of repeated auctions in the first an honest bid taker will not choose a vickrey auction in the second a trusted bid taker who cheats when it pays eventually destroys his or her reputation and the trust on which the use of vickrey auctions depends copyright 1995 by university of chicago press

get more pay more an elaborate test of construct validity of willingness to pay per qaly estimates obtained through contingent valuation estimates of wtp per qaly can be taken as an indication of the monetary value of health gains which may carry information regarding the appropriate height of the cost effectiveness threshold given the far reaching consequences choosing a particular threshold and thus the potential relevance of wtp per qaly estimates it is important to address the validity of these estimates this study addresses this issue our findings offer little support to the validity of wtp per qaly estimates obtained in this study implications for general wtp per qaly estimates and further research are discussed

selection investment and women s relative wages over time in theory growing wage inequality within gender should cause women to invest more in their market productivity and should differentially pull able women into the workforce our paper uses heckman s two step estimator and identification at infinity on repeated current population survey cross sections to calculate relative wage series for women since 1970 that hold constant the composition of skills we find that selection into the female full time full year workforce shifted from negative in the 1970s to positive in the 1990s and that the majority of the apparent narrowing of the gender wage gap reflects changes in female workforce composition we find the same types of composition changes by measuring husbands wages and national longitudinal survey iq data as proxies for unobserved skills our findings help to explain why growing wage equality between genders coincided with growing inequality within gender

statistical efficiency of double bounded dichotomous choice contingent valuation the statistical efficiency of conventional dichotomous choice contingent valuation surveys can be improved by asking each respondent a second dichotomous choice question which depends on the response to the first question if the first response is yes the second bid is some amount greater than the first bid while if the first response is no the second bid is some amount smaller this double bounded approach is shown to be asymptotically more efficient than the conventional singlebounded approach using data from a survey of californians regarding their willingness to pay for wetlands in the san joaquin valley we show that in a finite sample the gain in efficiency can be very substantial

preference reversals and the independence axiom of all of the paradoxical patterns of behavior reported in laboratory experiments one of the most perplexing for decision theorists is the preference reversal phenomenon a subject in a preference reversal experiment is typically given a choice between a lottery with a high probability of winning a modest amount of money a p bet and a lottery with a low probability of winning a large amount of money a bet the lowest amount of money for which the subject would willingly sell either of these lotteries is also elicited the most common reversal is for a subject to choose the p bet over the bet but to put a higher selling price on the bet preference reversals were first reported by harold lindman 1971 and sarah lichtenstein and paul slovic 1971 in discussing the psychologists discovery of such reversals david grether and charles plott remark the inconsistency is deeper than mere lack of transitivity or even stochastic transitivity it suggests that no optimization principles of any sort lie behind even the simplest of human choices 1979 p 623 this paper offers a simple alternative explanation of documented preference reversals an explanation that does not require the abandonment of the transitivity assumption

estimating willingness to pay from survey data an alternative pre test market evaluation procedure closed ended contingent valuation surveys are used to assess demands in hypothetical markets and recently have been applied widely to the valuation of non market environmental resources this int

why are u s women decreasing their labor force participation if their wages are rising given the traditional interpretation of women s labor force participation rate lfpr trends as movements along a positively sloped labor supply curve it is surprising that the recent downward trend in u s women s lfpr has occurred over a period when women s real wages were commonly believed to be rising i find that almost two thirds of the decline since 2000 is attributable to aging of the adult female population the remainder due to declining labor force participation for women under 55 becomes less puzzling in light of my evidence that the wage education locus faced by women actually may have worsened since 2000 jel j21 j31 j82

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

are stated preferences convergent with revealed preferences empirical evidence from nigeria abstract the debate on the relevance of monetary valuation of environmental goods has often hinged around the convergence of stated and revealed preferences and in turn the actual money choices of respondents in this paper we report two separate experiments conducted in southeastern nigeria to compare irrigators stated willingness to pay for a river basin restoration scheme designed to mitigate soil and water pollution problems in their farms with their actual expenditures to mitigate the same pollution problems we found that the farmers stated and revealed preferences were significantly correlated but yielded significantly different means at 5 level while econometric analysis reveals a systematic association between key socioeconomic variables and farmers stated wtp lending credence to the cvm within its theoretical framework analysis of the qualitative follow ups reveals inconsistencies in some farmers stated and revealed preferences that cannot be satisfactorily explained on the basis of economic theory alone while individual utility maximisation was a dominant driver of both stated and revealed preferences for most farmers lack of environmental awareness information complexity risk aversion and peer pressure were seen to limit the ability and willingness of the least educated segment of the sample to make apparently rational economic decisions in both markets overall the results question the use of convergent and or theoretical validity arguments for justifying and or criticising the use of stated preference experiments in environmental policy

estimating willingness to pay with exaggeration bias corrected contingent valuation method estimates of the prices customers are willing to pay for new products or services using responses from survey questionnaires are notoriously biased on the high side an approach to obtaining more realistic estimates is suggested here called the exaggeration bias corrected contingent valuation method ebc cvm the method is an alternative to conventional contingent valuation methods cvms that have been used in economics and to a lesser extent in marketing two experiments and one field study are presented to demonstrate the effectiveness of the method in each case the proposed method outperformed conventional cvms in comparison with real choices or more realistic price estimates

the substitution of information technology for other factors of production a firm level analysis fueled by its constant technological and price improvements information technology it is displacing other inputs in the production of goods and services by 1994 it accounts for over 15 of fixed investments by the u s private sector and the ratio of new it investments to labor costs is approaching 5 1990 dollar basis the ability to take advantage of improvements in it is determined in part by the substitutability of it for other factors of production this paper builds on the empirical framework of brynjolfsson and hitt brynjolfsson e l hitt 1995 information technology as a factor of production the role of differences among firms econom innovations and new tech 3 183 199 and extends it to jointly estimate output and substitution elasticities using the ces translog production function our primary source of it related data is the idg computerworld annual survey data on is spending by large u s firms for the period 1988 to 1992 previously analyzed by brynjolfsson and hitt brynjolfsson e l hitt 1995 information technology as a factor of production the role of differences among firms econom innovations and new tech 3 183 199 brynjolfsson e l hitt 1996 paradox lost firm level evidence on the returns to information systems spending management sci 424 541 558 and lichtenberg lichtenberg f r 1995 the output contributions of computer equipment and personnel a firm level analysis econom innovations and new tech 3 201 217 a key result is that it capital is a net substitute for both ordinary capital and labor suggesting that the factor share of it in production will grow to more significant levels over time we confirm earlier findings of positive returns to it investment for this data set further we find excess returns on it investment relative to labor input and some evidence of excess returns relative to ordinary capital taken together these results shed new light on the productivity paradox of it and on the growth of information intensity across the economy as firms take advantage of the continuing improvements in it

investigating the sensitivity of equilibrium profits to advertising dynamics and competitive effects the author investigates the validity of the flat maximum principle the insensitivity of a firm s profits to changes in its optimal advertising level in a duopolistic market in which advertising by the two firms has carryover effects two alternative competitive scenarios are examined i in which total industry sales are allowed to vary over time and ii where firms are engaged in market share rivalry for i the open loop nash equilibrium advertising strategies for the firms are derived assuming a specific sales response function and an infinite time horizon a numerical analysis of the sensitivity of firms profit functions to advertising expenditures is performed at different levels of the a discount rate b advertising elasticity and c advertising decay rate an empirical illustration from the pharmaceutical industry is provided special cases of the model formulation are examined analytically in order to highlight the intuition behind the flatness of the maximum and to study the sensitivity of results obtained to choice of equilibrium strategy closed loop vs open loop for the market share game closed loop policies are considered and the flat maximum principle is illustrated in the context of coke pepsi rivalry in the soft drinks market

wage adjustment in the great recession and other downturns evidence from the united states and great britain using 1979 2012 cps data for the united states and 1975 2012 nes data for great britain we study wage behavior in both countries with particular attention to the great recession real wages are procyclical in both countries but the procyclicality of real wages varies across recessions and does so differently between the two countries in ways that defy simple explanations we devote particular attention to the hypothesis that downward nominal wage rigidity plays an important role in cyclical employment and unemployment fluctuations we conclude that downward wage rigidity may be less binding and have lesser allocative consequences than is often supposed

hypothetical versus real willingness to pay in the health care sector results from a field experiment abstract we conducted a field experiment comparing hypothetical and real purchase decisions for a pharmacist provided asthma management program among 172 subjects with asthma subjects received either a dichotomous choice contingent valuation question or were given the opportunity to actually enroll in the program three different prices were used us 15 40 and 80 in the hypothetical group 38 of subjects said that they would purchase the good at the stated price but only 12 of subjects in the real group purchased the good p 0 000 we cannot however reject the null hypothesis that definitely sure hypothetical yes responses as identified in a follow up question correspond to real yes responses we conclude that the dichotomous choice contingent valuation method overestimates willingness to pay but that it may be possible to correct for this overestimation by sorting out definitely sure yes responses

changes in the male female wage gap 1976 85 this study uses detailed information on work experience tenure and on the job training collected in the 1976 and 1985 questionnaires of the panel study of income dynamics to account for changes in wage differentials between white men and white women over these nine years decompositions of changes in the wage gap are used to illustrate the contribution of individual factors between 1976 and 1985 the wage gap between white men and women narrowed by approximately 4 percent this study finds that nearly 50 percent of this reduction was due to average changes in job tenure and other work history variables over this period

modeling response to advertising and pricing changes for v 8 cocktail vegetable juice this paper is based on a series of studies undertaken for v 8 cocktail vegetable juice over a five year period the studies were a consequence of management questions regarding the effectiveness of a new advertising campaign the best media mix for this campaign and the apparent wear out of the advertising copy the studies included controlled experimentation estimation of advertising response functions and exploration of price sensitivity following major price increases by v 8 it was found that the short term response to advertising was s shaped and that the new creative approach rather than expenditure levels alone accounted for by far the largest component of the impact of advertising on sales it was also found that for a short period following the major price increases v 8 became extremely price sensitive however after about six months the marginal impact of price returned to historical levels the application of results at campbell soup company their relationship to the literature and their implications for both researchers and practitioners are discussed

bayesian analysis of interval data contingent valuation models and pricing policies the general aim of a contingent valuation survey is to elicit the willingness to pay wtp of respondents for some public commodity without a clear market price this could be a program to protect some environmental resource or as in our application the access to a recreational area of particular interest in this context we want to accommodate the possibility of zero wtp and we need to deal with the fact that observations arise as intervals for wtp rather than point observations we propose a flexible bayesian statistical analysis of wtp as a function of characteristics of the respondents that formally incorporates this structure through a mixture model we consider model uncertainty and pay particular attention to the predictive distribution of revenue if a certain entry price were asked the latter is an important tool for deriving pricing policies

consumption self control by rationing purchase quantities of virtue and vice consumers attempts to control their unwanted consumption impulses influence many everyday purchases with broad implications for marketers pricing policies addressing theoreticians and practitioners alike this paper uses multiple empirical methods to show that consumers voluntarily and strategically ration their purchase quantities of goods that are likely to be consumed on impulse and that therefore may pose self control problems for example many regular smokers buy their cigarettes by the pack although they could easily afford to buy 10 pack cartons these smokers knowingly forgo sizable per unit savings from quantity discounts which they could realize if they bought cartons by rationing their purchase quantities they also self impose additional transactions costs on marginal consumption which makes excessive smoking overly difficult and costly such strategic self imposition of constraints is intuitively appealing yet theoretically problematic the marketing literature lacks operationalizations and empirical tests of such consumption self control strategies and of their managerial implications this paper provides experimental evidence of the operation of consumer self control and empirically illustrates its direct implications for the pricing of consumer goods moreover the paper develops a conceptual framework for the design of empirical tests of such self imposed constraints on consumption in consumer goods markets within matched pairs of products we distinguish relative virtue and vice goods whose preference ordering changes with whet her consumers evaluate immediate or delayed consumption consequences for example ignoring long term health effects many smokers prefer regular relative vice to light relative virtue cigarettes because they prefer the taste of the former however ignoring these short term taste differences the same smokers prefer light to regular cigarettes when they consider the long term health effects of smoking these preference orders can lead to dynamically inconsistent consumption choices by consumers whose tradeoffs between the immediate and delayed consequences of consumption depend on the time lag between purchase and consumption this creates a potential self control problem because these consumers will be tempted to over consume the vices they have in stock at home purchase quantity rationing helps them solve the self control problem by limiting their stock and hence their consumption opportunities such rationing implies that per purchase occasion vice consumers will be less likely than virtue consumers to buy larger quantities in response to unit price reductions such as quantity discounts we first test this prediction in two laboratory experiments we then examine the external validity of the results at the retail level with a field survey of quantity discounts and with a scanner data analysis of chain wide store level demand across a variety of different pairs of matched vice regular and virtue reduced fat calorie or caffeine etc product categories the analyses of these experimental field and scanner data provide strong convergent evidence of a characteristic crossover in demand schedules for relative vices and virtues for categories as diverse as among others potato chips chocolate chip cookies cream cheese beer soft drinks ice cream and frozen yogurt chewing gum coffee and beef andturkey bologna vice consumers demand increases less in response to price reductions than virtue consumers demand although their preferences are not generally weaker for vices than for virtues constraints on vice purchases are self imposed and strategic rather than driven by simple preferences we suggest that rationing their vice inventories at the point of purchase allows consumers to limit subsequent consumption as a result of purchase quantity rationing however vice buyers forgo savings from price reductions through quantity discounts effectively paying price premiums for the opportunity to engage in self control thus purchase quantity rationing vice consumers are relatively price in sensitive from a managerial and public policy perspective our findings should offer marketing practitioners in many consumer goods industries new opportunities to increase profits through segmentation and price discrimination based on consumer self control they can charge premium prices for small sizes of vices relative to the corresponding quantity discounts for virtues virtue consumers on the other hand will buy larger amounts even when quantity discounts are relatively shallow a key conceptual contribution of this paper lies in showing how marketing researchers can investigate a whole class of strategic self constraining consumer behaviors empirically moreover this research is the first to extend previous theoretical work on impulse control by empirically demonstrating its broader implications for marketing decision making

a duopolistic model of dynamic competitive advertising abstract this paper proposes a differential game model of competitive advertising decisions for non durable products by extending the lanchester model and the deal model of competitive advertising in the literature the proposed model is compared empirically with the lanchester model for model fitting and forecast accuracy it is shown that the model is suitable for an actual market and out performs the lanchester model in forecast accuracy the model provides a sensible modeling alternative to the lanchester model for the study of dynamic competitive advertising decisions necessary and sufficient conditions for open loop and closed loop nash equilibrium solutions to the model are discussed a numerical algorithm for open loop and closed loop nash strategies to the model is developed

changes in the labor supply behavior of married women 1980 2000 using march current population survey data we investigate married women s labor supply from 1980 to 2000 we find a large rightward shift in their labor supply function for annual hours in the 1980s with little shift in the 1990s these shifts account for most of the slowdown in the growth of labor supply during this period a major development was the dramatic decrease in the responsiveness of married women s labor supply to their own and husbands wages their own wage elasticity fell by 50 56 while their cross wage elasticity fell by 38 47 in absolute value

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

the quiet revolution that transformed women s employment education and family the modern economic role of women emerged in four phases the first three were evolutionary the last was revolutionary phase i occurred from the late nineteenth century to the 1920s phase ii was from 1930 to 1950 phase iii extended from 1950 to the late 1970s and phase iv the quiet revolution began in the late 1970s and is still ongoing three aspects of women s choices distinguish the evolutionary from the revolutionary phases horizon identity and decision making the evolutionary phases are apparent in time series data on labor force participation the revolutionary phase is discernible using time series evidence on women s more predictable attachment to the workplace greater identity with career and better ability to make joint decisions with their spouses each of these series has a sharp break or inflection point signifying social and economic change these changes moreover coincide by birth cohort or period the relationship between the development of modern labor economics and the reality of women s changing economic role is explored the paper concludes by assessing whether the revolution has stalled or is being reversed women who graduated college in the early 1980s did not opt out but recent cohorts are too young to evaluate this abstract was borrowed from another version of this item

5 information impact and allocation rules in auctions with affiliated private values a laboratory study in affiliated private value auctions each bidder has perfect information regarding his her own value for the object at auction but higher values of the item for one bidder make higher values for other bidders more likely we report on a series of experiments examining three key implications of these auctions i in a first price auction public information about rivals values increases expected revenue ii an english auction increases expected revenue compared to a first price auction and iii a second price auction is isomorphic to an english auction in examining these issues we compare predictions of some ad hoc bidding models with nash equilibrium predictions in the first price auction experiments nash equilibrium bidding theory organizes the data better than either of two ad hoc bidding models public information about others valuations does increase average revenue but the increase in revenue is smaller and less reliable than predicted under risk neutral nash equilibrium bidding lower average revenue might be attributed to risk aversion while the high variability is attributed to a sizable frequency of individual bidding errors relative to the theory bidding theory precisely organizes english auction outcomes after a brief initial learning period the dominant strategy equilibrium does not organize second price auctions nearly as well as market prices persistently exceed predicted prices the difference between english and second price outcomes is attributed to effects of different information flows inherent in the structure of the two institutions on eliminating bidding errors revenue impacts of these two institutions relative to a first price auction are examined in light of observed bidding patterns

on the generalizability of advertising pulsation monopoly results to an oligopoly this paper introduces for the first time an analytical framework for modeling and analyzing sales response to advertising pulsation for competitive markets of mature products in continuous time for discrete piecewise policies that allow unequal cycle lengths employing a nash equilibrium solution concept this study supported with numerical analysis demonstrates that there is an oligopolistic as opposed to a monopolistic justification for advertising at a constant rate in the presence of concave response functions or advertising according to a pulsing policy in the presence of s shaped response functions the article employs a modeling framework whereby each of a set of competitors responses to advertising spending is governed mainly by lanchester type response is used to analyze the game resulting from cyclical advertising policies that are strictly adhered to by all players a non discounted averaged performance is used to assess the purported optimality of different variants of piecewise constant policies

pulsation in a competitive model of advertising firm s cost interaction the literature reveals contradiction between theoretical results superiority of uniform policy under a concave advertising response function and empirical results concavity of the advertising response function and the superiority of a pulsation policy to reconcile the above difference this paper offers a resolution based on 1 the concavity of the advertising response function 2 the convexity of the firm s cost function and 3 over advertising the resolution is reached upon maximizing the net profit per unit time over the infinite planning horizon subject to an exogenous advertising budget constraint theoretical results for monopolistic markets are found mostly generalized to competitive markets a numerical example is introduced to gain more insight into the theoretical findings and an approach is introduced and implemented to empirically assess the shape of a firm s cost function and the advertising policy to be employed

the financial rewards of new product introductions in the personal computer industry based on data from firms in the personal computer industry we study the effect of new product introductions on three key drivers of firm value profit rate profit rate persistence and firm size as reflected in asset growth consistent with our theoretical development we find that new product introductions influence profit rate and size however we find no effect on profit rate persistence interestingly we also find that the effect of new product introductions on profit rate stems from a reduction in selling and general administrative expenditure intensity rather than through an increase in gross operating return notably firms decrease their advertising intensity in the wake of a new product introduction firm profitability in this industry apparently benefits from new product introductions because new products need less marketing support than older products

predicting advertising pulsing policies in an oligopoly a model and empirical test given that firms pulse in advertising should firms pulse in or out of phase it is shown that out of phase maximizes the oligopoly profits and is also the markov perfect equilibrium of the infinite horizon game the basic intuition for this result comes from the following fact it is more profitable to increase consideration when the competitor s consideration is lower evidence from several product categories seems to support this theoretical result

marketing production decisions in an industrial channel of distribution this paper presents a model that considers the interface between marketing and production decisions in a channel of distribution of industrial goods comprised of a manufacturer and a distributor the key issue investigated is the nature of the coordination within the channel in light of an unstable pattern of seasonal demand the investigation which focuses on dynamic issues considers production activities such as product delivery and inventory policy and their link to marketing strategies such as pricing policies the focus here is on the dynamic nature of the coordinational aspects of the various policies for example the following questions are addressed what is the distributor s pricing strategy throughout the season what is the nature of the contractual price in the channel under what conditions should the distributor carry no inventory throughout the seasonal period under what conditions should the manufacturer carry no inventory what is the impact of the seasonal parameters and differing h

female labor supply why is the united states falling behind abstract in 1990 the us had the sixth highest female labor participation rate among 22 oecd countries by 2010 its rank had fallen to seventeenth we find that the expansion of family friendly p

universal health insurance in the clinton plan coverage as a tax financed public good the financing arrangements embodied in the clinton health reform plan involve some important differences in the way in which public goods are usually financed the subsidies to small low wage firms mandated to provide benefits distort markets in both labor and products and offer incentives for the creation of small firms in addition the financing scheme implicitly envisions a head tax on families at modest income levels but offers a possible rationale for it nevertheless the main reason for many of the financing features appears to be an attempt to hold down the apparent budgetary cost of universal coverage

the contingent valuation debate why economists should care t he contingent valuation method involves the use of sample surveys questionnaires to elicit the willingness of respondents to pay for generally hypothetical projects or programs the name of the method refers to the fact that the values revealed by respondents are contingent upon the constructed or simulated market presented in the survey a spirited and occasionally mean spirited battle over such methods is currently being waged involving competing factions within the federal government economists and lawyers representing business and environmental groups and interested academics as well at issue is a seemingly quite specific question should environmental regulations currently under development at both the department of the interior and the department of commerce sanction the use of the contingent valuation method in estimating the damage done by spills of oil chemicals or other substances covered by federal law more generally the debate raises broad questions about what economists have to say about the values that individuals place on public or private goods the two papers that follow this one make cases for and against the use of the contingent valuation method my aim here is to provide an overview of the technique and the debate surrounding it i also want to suggest why this debate should matter to economists both professionally and in their roles as citizens and consumers

if you have the flu symptoms your asymptomatic spouse may better answer the willingness to pay question evidence from a double bounded dichotomous choice model with heterogeneous anchoring the small sample size of contingent valuation cv surveys conducted in patients may have limited the use of the single bounded sb dichotomous choice format which is recommended in environmental economics in this paper we explore two ways to increase the statistical efficiency of the sb format 1 by the inclusion of proxies in addition to patients 2 by the addition of a follow up dichotomous question i e the double bounded db dichotomous choice format we found that patients n 223 and spouses n 64 answering on behalf of the patient had on average a similar willingness to pay for earlier alleviation of flu symptoms however a patient was significantly more likely to anchor his her answer on the first bid as compared to a spouse finally our original db model with shift effect and heterogeneous anchoring reconciled the discrepancies found in willingness to pay statistics between sb and db models in keeping with increased statistical efficiency

on the superiority of pulsing under a concave advertising market potential function abstract the authors study the superiority of advertising pulsing policy turning advertising on and off in a cyclic fashion over its uniform constant spending counterpart that costs the same under the assumption that sales dynamics follow a modified vidale wolfe aggregate advertising model the authors show that pulsing can be superior if the product of the concave market potential function and the linear or concave advertising response function is convex in advertising similar to previous studies in the literature the average undiscounted profit over the infinite planning horizon is considered as a performance measure according to which alternative advertising pulsation policies are compared employing a well known data set relating advertising to sales the above convexity requirement is empirically supported and the superiority of pulsing is established numerically the performance of the proposed model is found to be superior to two rival models using a one step ahead forecasting procedure the analytical findings of the study are documented into six theoretical results for which proofs are relegated to a separate appendix managerial implications of the study and directions for future research are also discussed

valuing health care using willingness to pay a comparison of the payment card and dichotomous choice methods this paper compares willingness to pay wtp estimates generated from the dichotomous choice dc and payment card pc approaches in a split sample wtp experiment concerned with allocating scarce health care resources across three health care interventions the dc approach is shown consistently to generate larger welfare estimates than the pc observed difference between pc and dc experiments cannot be explained by the inclusion of non demanders or methods of statistical analysis but may be partly explained by yea saying no evidence of range bias or mid point bias was found with pc responses data were also collected on respondents ordinal rankings of the three interventions and person trade offs ptos neither of these approaches converged with wtp future work must address the decision heuristics individuals employ when responding to valuation experiments

consistency of risk premium measures this research uses the results of a series of within sample experiments to elicit risk premium measures from agricultural producers results show that there is little consistency between measures in different contexts and using different elicitation methods suggesting that underlying risk preferences are not consistent these results highlight some of the difficulty with expected utility theory and risk measurement

advertising strategies in a dynamic oligopoly the author uses a dynamic model of oligopolistic advertising competition in which competitors are assumed to make a series of single period advertising decisions with salvage values attached to achieved sales in each period as the foundation for empirical analysis of the competitive situation involving the three largest ready to eat cereal manufacturers kellogg general mills and the post division of philip morris general foods the primary insight of the author s empirical analysis is that general mills places a higher future value on achieved sales than do the other competitors in the market

dynamic female labor supply the increase in female employment and participation rates is one of the most dramatic changes to have taken place in the economy during the last century however while the employment rate of married women more than doubled during the last 50 years that of unmarried women remained almost constant to empirically analyze these trends we estimate a female dynamic labor supply model using an extended version of eckstein and wolpin 1989 to compare the various explanations in the literature for the observed trends this dynamic model provides a much better fit to the life cycle employment pattern than a static version of the model and a standard static reduced form model heckman 1979 the main finding using the dynamic model is that the rise in education levels accounts for about 33 percent of the increase in female employment and the rise in wages and narrowing of the gender wage gap account for another 20 percent while about 40 percent remains unexplained by observed household characteristics we show that this unexplained portion can be empirically attributed to cohort specific changes in preferences or the costs of child rearing and household maintenance finally the decline in fertility and the increase in divorce rates account for only a small share of the increase in female employment rates

an incentive compatible conjoint ranking mechanism a simple method for making ranking based conjoint analysis incentive compatible is proposed the incentive compatible mechanism involves people purchasing a product profile with a probability proportional to its assigned rank in an empirical application related to consumer preferences for beef attributes we find that the forecasted market share for a new pasture raised steak obtained using incentive compatible rankings was significantly greater than that implied from traditional hypothetical conjoint rankings people s rankings of ground beef products were not affected by the mechanism or by information about pasture raised beef copyright 2008 oxford university press

cognitive ability and scale bias in the contingent valuation method this study investigates whether or not the scale bias found in contingent valuation cvm studies on mortality risk reductions is a result of cognitive constraints among respondents scale bias refers to insensitivity and non near proportionality of the respondents willingness to pay wtp to the size of the risk reduction two hundred swedish students participated in an experiment in which their cognitive ability was tested before they took part in a cvm study asking them about their wtp to reduce bus mortality risk the results imply that wtp answers from respondents with a higher cognitive ability are less flawed by scale bias

trends in men s earnings volatility what does the panel study of income dynamics show abstract many recent studies have investigated trends in u s men s earnings volatility but the studies based on the panel study of income dynamics appear to conflict with each other and with studies based on other data we critique some of the existing methods of measuring earnings volatility and we advocate for transparent methods that focus on simple measures of dispersion in year to year earnings changes applying such measures in the psid we find that apart from the well known counter cyclicality of earnings volatility men s earnings volatility increased during the 1970s but did not show a clear trend afterwards until a new upward trend appeared after 1998

exploring preference anomalies in double bounded contingent valuation double bounded dichotomous choice dbdc contingent valuation offers increased efficiency of willingness to pay wtp estimates compared with the single bounded format however evidence suggests dbdc generates anomalous respondent behaviour this paper provides the first investigation and explanation of these anomalies in health results suggest the incentives for truthful preference revelation are altered in the presence of a follow up question this result is found using both regression techniques and analysis of raw responses although findings suggest very certain respondents exhibit less anomalous behaviour inconsistencies remain across bounds the results of this study question the use of iterative valuation formats

benefits transfer of willingness to pay estimates and functions for health risk reductions a cross country study this paper provides a first application of the techniques of benefits transfer to the health economics literature these techniques seek to transfer the value of some good from one survey context to a new policy context so avoiding the need for new valuation surveys each time a new policy question arises two approaches to benefits transfer are assessed the simple transfer of mean values and the transferral of value functions we develop a new methodology for the latter approach in which value functions are iteratively built up from theoretical principles with transfer errors being tested each time a new variable is added through a novel application of advanced statistical tests we show that this approach outperforms the transferral of statistically driven best fit functions the case study presented focuses upon the transfer of contingent valuation cv willingness to pay wtp estimates and associated value functions for reducing the health risks associated with solar ultraviolet uv exposure common format studies are conducted in four countries with transfers between all of these being undertaken by calculating errors in predicted versus actual values across countries we show that when transferring between similar contexts simple mean value transfers outperform more complex value function transfers with the magnitude of the former errors being encouragingly small however this result is reversed when transfers are undertaken across dissimilar contexts where value functions partially adjust for these differences in summary these findings provide support and guidance for future applications

recent developments in dynamic advertising research a variety of continuous time differential functions have been developed to investigate dynamic advertising problems in business and economics fields since major dynamic models appearing before 1995 have been reviewed by a few survey papers we provide a comprehensive review of the dynamic advertising models published after 1995 which are classified into six categories i nerlove arrow model and its extensions ii vidale wolfe model and its extensions iii lanchester model and its extensions iv the diffusion models v dynamic advertising competition models with other attributes and vi empirical studies for dynamic advertising problems for each category we first briefly summarize major relevant before 1995 models and then discuss major after 1995 models in details we find that the dynamic models reviewed in this paper have been extensively used to analyze various advertising problems in the monopoly duopoly oligopoly and supply chain systems our review reveals that the diffusion models have not been used to analyze advertising problems in supply chain operations which may be a research direction in the future moreover we learn from our review that very few publications regarding dynamic advertising problems have considered the supply chain competition we also find that very few researchers have used the diffusion model to investigate the dynamic advertising problems with product quality as a decision variable and the pricing decision has not been incorporated into any extant lanchester model the paper ends with a summary of our review and suggestions on possible research directions in the future

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

are hypothetical referenda incentive compatible a comment in a recent article in this journal cummings al 1997 offer experimental evidence rejecting the hypothesis that a hypothetical referendum is an incentive compatible mechanism for obtaining the social value of or willingness to pay for changes in the allocation of environmental goods and services while cautions in offering a blanket rejection of hypothetical referenda as a means of measuring economic values on the basis of their findings the authors do suggest that at least in experimental settings respondents appear to behave differently when real money is changing hands wheather hypothetical situations adequately mimic real market situations has been debated in the contigent valuation literature since its inception see cummings brookshire and schulze 1986 cummings et al s finding of incentive incompatibility appears to offer strong evidence for the critics of hypothetical referenda

estimation uncertainty and optimal advertising decisions in this paper we develop a normative model that is built on an empirically relevant foundation we observe that decision makers among them advertisers rely on estimated relationships in reaching resource allocation decisions and we investigate the normative implications of this process in particular we explore the effects of uncertainty stemming from the use of sample estimates of population parameters in general we find that ignoring this estimation related uncertainty leads to suboptimal decisions

optimal advertising strategies this paper considers advertising policies for a very general class of response functions it is shown that if a pulsing policy is used awareness or sales eventually settle down to a steady cycle and the average response over the cycle is a decreasing function of the length of the cycle when response shows increasing returns to scale it is possible in theory to use a device called chattering to replace the true response by a straight line which lies above the true response in the region in which chattering is used a numerical example is given to show how the optimal policy can be computed when part of the response is linear and the results obtained are compared with those of the best practicable approximation to chattering it is shown that the problem of maximising awareness or sales subject to a budget constraint is structurally identical with maximising profit after advertising with or without a constraint in either case it is possible that for part of the time the optimal policy involves chattering

single women s labor supply elasticities trends and policy implications this paper uses cps data to examine changes in single women s labor supply elas ticities in recent decades specifically the authors investigate trends in how single women s hours of work and labor force participation rates responded to both wages and income over the years 1979 2003 results from the base specification suggest that over the observation period hours wage elasticities decreased by 82 participation wage elasticities by 36 and participation income elasticities by 57 these results imply that changes in tax policy had a much larger effect on the labor supply and labor force participation behavior of women in this subpopulation in the early 1980s than in recent years i t is well documented that over the past few decades female labor force behavior has undergone substantial changes women s labor force participation rates have increased markedly as have their annual hours of work at the same time the marital composition of women has undergone a substantial change as well with the proportion of married women falling steadily over time as a result single women comprise a greater share of the labor force than in earlier years and hence their behavioral responses to changes in wages and incomes carry even greater importance for the effects of changes in tax and transfer policies despite the large increase in the number of single women over the past decades single women s labor supply behavior has received

using laboratory experimental auctions in marketing research a case study of new packaging for fresh beef this paper illustrates the use of laboratory experimental auctions in a pretest market research program for new products we review the experimental auctions literature discuss the range of auction mechanisms available and present the advantages and disadvantages of using a particular mechanism for a laboratory pretest market we then present a step by step example of how a theoretically incentive compatible auction mechanism fifth price sealed bid was used in a laboratory pretest market for vacuum packaged beef based on the illustration we discuss the potential for using laboratory experimental auctions in pretest market research we present the limitations that may be encountered in such applications and outline research aimed at improving the behavioral properties of the technique

the incredible shrinking elasticities married female labor supply 1978 2002 this paper demonstrates the extent to which married women s labor supply elasticities have changed over the past quarter century estimates from march current population survey data suggest that these elasticities have decreased substantially by 60 percent for the hours wage elasticity from 0 36 to 0 14 70 percent for the hours income elasticity from 0 053 to 0 015 95 percent for the participation wage elasticity from 0 66 to 0 03 and 60 percent for the participation income elasticity from 0 13 to 0 05 changing demographic characteristics explain little of the drop in these elasticities suggesting that preferences toward work have changed across birth cohorts

measurement of health state utilities for economic appraisal health status measurement for use in economic appraisal of health care programmes is reviewed in this paper with particular emphasis on utility measurement a framework for economic appraisal is presented displaying the various components that must be measured and showing how the three forms of analysis cost effectiveness analysis cost benefit analysis and cost utility analysis relate to the framework and to each other one of the components in the framework is health status it can be measured using ad hoc numeric scales willingness to pay receive or health state utilities the determination of health state utilities is reviewed covering the following issues alternative sources of utilities health state descriptions multi attribute utility approach determination of appropriate subjects utility aggregation and accuracy three measurement techniques for health state utilities are described in detail rating scale standard gamble and time trade off the use of these methods is described for both chronic and temporary health states and for both health states considered better than death and those considered worse than death

planning media schedules in the presence of dynamic advertising quality a key task of advertising media planners is to determine the best media schedule of advertising exposures for a certainbudget conceptually the planner could choose to do continuous advertising i e schedule ad exposures evenly overall weeks or follow a strategy of pulsing i e advertise in some weeks of the year and not at other times previous theoretical analyses have shown that continuous advertising is optimal for nearly all situations however pulsing schedules are very common in practice either the pract ice of pulsing is inappropriate or extant models have not adequately conceptualized the effects of advertising spending over time this paper offers a model that shows pulsing strategies can generate greater total awareness than the continuous advertising when the effectiveness of advertisement i e adquality varies overtime specifically ad quality declines because of advertising wearout during periods of continuous advertising and it restores due to forgetting effects during periods of no advertising such dynamics make it worth while for advertisers to stop advertising when ad quality becomes very low and wait for ad quality to restore beforestarting the next burst again as is common in practice based on the extensive behavioral research on advertising repetition and advertising wearout we extend the classical nerlove and arrow 1962 model by incorporating the notions of repetition wearout copy wearout and ad quality restoration repetition wearout is a result of excessive frequency beca use ad viewers perceive that there is nothing new to be gained from processing the ad they withdraw their attention or they become unmotivated to react to advertising information copy wearout refers to the decline inad quality due to passage of time independent of the level of frequency ad quality restoration is the enhancement of ad quality during media hiatus as a consequence of viewers forgetting the details of the advertised messages thus making ads appear like new when reintroduced later the proposed model has the property that when wearout effects are present a strategy of pulsing is superior to continuous advertising even when the advertising response function is concave this is illustrated by a numerical example that compares the total awareness generated by a single concentrated pulse of varying duration blitz schedules and continuous advertising the even schedule this property can be explained by the tension between the pressure to spend the fixed media budget quickly to avoid copy wearout and the opposing pressure to spread out the media spending over time to mitigate repetition wearout the proposed model is empirically tested by using brand level data from two advertising awareness tracking studies that also include the actual spen ding schedules the first data set is for a major cereal brand while the other is for a brand of milk chocolate such advertising tracking studies are now a common and popular means for evaluating advertising effectiveness in many markets e g millward brown narketmind in the empirical tests the model parameters are estimated by using the kalman filter procedure which is eminently suited for dynamic models because it attends to the intertemporal dependencies in awareness build up and decay via the use of conditional densities the estimated parameters are statistically significant have the expected signs and are meaningful from both theoretical and managerial viewpoints the proposed model fits both the data sets rather well and better than several well known advertising models namely the vidale wolfe brandaid litmus and trackermodels but not decisively better than the nerlove arrow model however unlike the nerlove arrow model the proposed model yields different total awareness for different strategies of spending the same fixed budget thus allowing media planners to discriminate among several media schedules given the empirical support for the model the paper presents an implementable approach for utilizing it to evaluate large numbers of alternative media schedules and determine the best set of media schedules for consideration in media planning this approach is based on an algorithm that combines a genetic algorithm with the kalman filter procedure the paper presents the results of applying this approach in the case studies of the cereal and milk chocolate brands the form of the best advertising spending strategies in each case was a pulsing strategy and there were many schedules that were an improvement over the media schedule actually used in each campaign

evaluating the validity of the dichotomous choice question format in contingent valuation hypothetical and actual cash willingness to pay wtp for an art print were elicited with dichotomous choice and open ended question formats comparing hypothetical and actual dichotomous choice responses using both a likelihood ratio test and the method of convolutions suggests we reject equality at the 0 05 but not the 0 01 level hypothetical wtp was roughly two times actual wtp with the dichotomous choice format there were no significant differences between the open ended and dichotomous choice question formats when both were used to estimate hypothetical wtp or both used to estimate actual wtp

focusing on the forgone how value can appear so different to buyers and sellers we propose that buying and selling price estimates reflect a focus on what the consumer forgoes in the potential exchange and that this notion offers insight into the well known difference between those two types of value assessment buyers and sellers differ not simply in their valuation of the same item but also in how they assess the value buyers tend to focus on their sentiment toward what they forgo typically the expenditure and buying prices are thus heavily influenced by variables such as salient reference prices by the same token sellers tend to focus on their sentiment toward surrendering the item and selling prices are hence more heavily influenced by variables such as benefits of possessing the item four studies examining buying and selling price estimates of tickets for national collegiate athletic association basketball games offer consistent support for these ideas the studies show that naturally occurring differences among respondents in attitudes relating to the tickets that sellers forgo e g significance of the game corresponded more closely to variation in selling prices than in buying prices conversely measures relating to the expenditure e g respondents concern with money corresponded more closely to buying prices than to selling prices using controlled manipulations we then showed that changes in aspects relating to the game e g expected climate in the stadium affected selling prices more than buying prices but changes relating to the expenditure e g list price of the ticket influenced buying prices more than selling prices we also showed that drawing attention to the benefits of possessing a ticket before asking for the price estimates influenced buying prices more than selling prices supporting our claim that otherwise these benefits are naturally more salient to sellers than buyers similarly drawing attention to alternative uses of money before asking for price estimates influenced selling prices more than buying prices

goethe s second price auction in 1797 johann wolfgang von goethe sold a manuscript through a second price auction we investigate goethe s motivation in the context of the late eighteenth century s book market and relate it to modern auction theory

time series growth in the female labor force in this paper we investigate the reasons for the growth in the female labor force in america during the twentieth century in our research we study the longer term trends since 1900 and conduct a more intensive examination of developments after the second world war on the basis of our work we conclude that rising real wages accounted for 60 of the total growth in the female labor force half of this wage effect in expanding labor supply was the fertility reducing consequence of a higher female wage

mitigating hypothetical bias evidence on the effects of correctives from a large field study the overestimation of willingness to pay wtp in hypothetical responses is a well known finding in the literature various techniques have been proposed to remove or at least reduce this bias using about 30 000 responses on wtp for a variety of power mixes from a panel of 6500 german households and the fixed effects estimator to control for unobserved heterogeneity this article simultaneously explores the effects of two common ex ante approaches cheap talk and consequential script and the ex post certainty approach to calibrating hypothetical wtp responses based on a switching regression model that accounts for the potential endogeneity of respondent certainty we find evidence for a lower wtp among those respondents who classify themselves as definitely certain about their answers although neither cheap talk nor the consequential script corrective reduce wtp estimates receiving either of these scripts increases the probability that respondents indicate definite certainty about their wtp bids

households willingness to pay for health microinsurance and its impact on actual take up results from a field experiment in senegal abstractcommunity based health insurance schemes cbhis have been present in the region of theis senegal for many years yet despite the benefits they offer take up rates remain low this article measures the willingness to pay wtp for cbhis premiums in such a context our results highlight the role of income wealth and risk preferences as determinants of wtp we also provide an analysis of the predictive power of wtp on the actual take up of insurance following our offering of membership to a sample of 360 households results show that wtp has a positive and significant impact on actual cbhis take up