staggered and synchronized price policies under inflation the multiproduct monopoly case this paper analyses the optimum pricing policies of a multiproduct monopoly in the presence of inflation and fixed costs of nominal price changes we examine the conditions which lead to staggered or synchronized pricing policies when the timing of price changes is endogenous two aspects of the decision problem are emphasized the interactions in the joint profit function between the prices of the various goods and the interactions in the costs of price adjustment we show that with positive interactions in the profit function and costs of price adjustments that are independent across products staggering is unlikely depending on initial conditions a firm may follow a staggered steady state or a synchronized steady state path but the former is locally unstable while the latter is attained from a broad set of initial conditions for a small rate of interest the staggered policy is optimal if the interaction in profits is negative

the empirical content of the roy model this paper clarifies and extends the classical roy model of self selection and earnings inequality the original roy model based on the assumption that log skills are normally distributed is shown to imply that pursuit of comparative advantage in a free market reduces earnings inequality compared to the earnings distribution that would result if workers were randomly assigned to sectors aggregate log earnings are right skewed even if one sectoral distribution is left skewed most major implications of the log normal roy model survive if differences in skills are log concave however few implications of the model survive if skills are generated from more general distributions we consider the identifiability of the roy model from data on earnings distributions the normal theory version is identifiable without regressors or exclusion restrictions sectoral distributions can be identified knowing only the aggregate earnings distribution for general skill distributions the model is not identified and has no empirical content with sufficient price variation the model can be identified from multimarket data cross sectional variation in regressors can substitute for price variation in restoring empirical content to the roy model

natural groups and economic characteristics as driving forces of wage discrimination we investigate whether the origin of an employee provides different motives for wage discrimination in gift exchange experiments with students and migrant workers in china in a lab and an internet experiment subjects in the role of employers can condition their wages on the employees home provinces the resulting systematic differences in wages can be linked to natural groups and economic characteristics of the provinces in group favoritism increases wages for employees who share the same origin as the employer while an increased probability of being matched with an employee with a different ethnicity reduces wages furthermore wages in the laboratory increase with the actual wage level in the employees home province nevertheless employees effort is not influenced by these variables only the wage paid in the experiment influences effort

the behavior of prices and inflation an empirical analysis of disaggregat price data this paper analyzes the effects of inflation on the dispersion of prices as well as other aspects of price behavior using disaggregated data on prices of foodstuffs in israel during 1978 84 we find that the effect of expected inflation on intramarket price variability is stronger than the effect of unexpected inflation we show that even in times of high inflation price quotations are not trivially short and price changes are not synchronized across firms these facts taken together confirm that there is some staggering in the setting of prices we find that the distribution of real prices is far from being uniform as many menu cost based models assume or conclude in fact as inflation increases to very high levels this distribution is not even symmetric when the annual inflation rate reaches 130 percent there are equal chances of finding real prices above or below the market average but upward deviations in the real price are further away from zero than downward ones furthermore as the annu

rationally inattentive seller sales and discrete pricing prices tend to remain constant for a period of time and then jump in the literature this rigidity is usually interpreted to reflect a cost of adjusting prices this article shows that price rigidity can alternatively reflect optimal price setting when there are no adjustment costs namely if the seller is rationally inattentive the model generates non trivial pricing patterns that are consistent with the data and that are hard to explain with the traditional adjustment cost model in particular prices are adjusted frequently but move back and forth between a few given values hazard functions are downward sloping and responses to persistent shocks are sluggish these results are obtained in a model that implements rational inattention without simplifying assumptions on the functional forms of the processed signals

why do manufacturers issue coupons an empirical analysis of breakfast cereals we explore the relationship between shelf prices and manufacturers coupons for 25 readyto eat breakfast cereals we find that shelf prices are lower during periods when coupons are available this result is inconsistent with static monopoly price discrimination under a broad range of assumptions we present evidence that is inconsistent with both dynamic theories of price discrimination and explanations of couponing based on the vertical relationship between manufacturers and retailers we find support for models of price discrimination in oligopoly settings as well as suggestions that firmwide incentives may induce managers to use coupons and price cuts simultaneously finally lagged coupons have a positive effect on current sales suggesting that coupons are used to induce repurchase

the timing and magnitude of retail store markdowns evidence from weekends and holidays we examine daily prices of eight goods at seventeen retail stores collected in ann arbor michigan over a four month period from november 1 to february 28 we focus on weekly and seasonal price patterns and on the frequency of price markdowns or sales there were frequent markdowns in the intensive shopping period prior to christmas and a tendency for such sales to occur on weekends we interpret these findings as evidence that a significant number of markdowns are timed to occur when shopping intensity is exogenously high we complement the imperfect information based motives for sales in the literature by contributing an additional element based on the role of bulk shopping and increasing returns in the shopping technology

menu costs and dynamic duopoly examining a state dependent pricing model in the presence of menu costs and dynamic duopolistic interactions this paper claims that the assumption regarding market structure is crucial for identifying the menu costs for price changes prices in a dynamic duopolistic market can be more rigid than those in more competitive markets such as a monopolistic competition market therefore the estimates of menu costs under monopolistic competition are potentially biased upward due to the price rigidity from strategic interactions between dynamic duopolistic firms by developing and estimating a dynamic discrete choice model with duopoly to correct for this potential bias this paper provides empirical evidence that dynamic strategic interactions as well as menu costs play an important role in explaining the observed degree of price rigidity in weekly retail prices

the behavioralist visits the factory increasing productivity using simple framing manipulations recent discoveries in behavioral economics have led to important new insights concerning what can happen in markets such gains in knowledge have come primarily via laboratory experiments a missing piece of the puzzle in many cases is parallel evidence drawn from naturally occurring field counterparts we provide a small movement in this direction by taking advantage of a unique opportunity to work with a chinese high tech manufacturing facility our study revolves around using insights gained from one of the most influential lines of behavioral research framing manipulations in an attempt to increase worker productivity in the facility using a natural field experiment we report several insights for example conditional incentives framed as both losses and gains increase productivity for both individuals and teams in addition teams more acutely respond to bonuses posed as losses than as comparable bonuses posed as gains the magnitude of this framing effect is roughly 1 that is total team productivity is enhanced by 1 purely due to the framing manipulation importantly we find that neither the framing nor the incentive effect lose their significance over time rather the effects are observed over the entire sample period moreover we learn that repeated interaction with workers and conditionality of the bonus contract are substitutes for sustenance of incentive effects in the long run this paper was accepted by gerard p cachon decision analysis

patterns of retail price variation we examine retail price variation across a range of goods and regions of the united states we find that the typical grocery product has a regular price and stays at that price at least 50 of the time and that most deviations from that regular price are downward temporary discounts or sales while infrequent account for 20 to 50 of the annual variation in retail prices for most product categories although existing models of retail sales yield predictions consistent with some aspects of the retail pricing distributions all of these models fail to explain other important aspects of retail pricing identified here

estimating a simultaneous search model the primary goal of this article is to specify and estimate a structural simultaneous search model and then determine the empirical importance of simultaneous search the results indicate that new labor force entrants search simultaneously a secondary goal is to identify and estimate job offer arrival rates and wage offer rejection probabilities separately the results indicate that a significant portion of unemployment spells are caused by slow arrival rates but policies intended to speed arrival rates would increase the average length of unemployment spells

relational contracts and the theory of the firm relational contracts informal agreements sustained by the value of future relationships are prevalent within and between firms we develop repeated game models showing why and how relational contracts within firms vertical integration differ from those between nonintegration we show that integration affects the parties temptations to renege on a given relational contract and hence affects the best relational contract the parties can sustain in this sense the integration decision can be an instrument in the service of the parties relationship our approach also has implications for joint ventures alliances and networks and for the role of management within and between firms

integration of inventory and pricing decisions with costly price adjustments motivated by the widespread adoption of dynamic pricing in industry and the empirical evidence of costly price adjustments in this paper we consider a periodic review inventory model with price adjustment costs that consist of both fixed and variable components in each period demand is stochastic and price dependent the firm needs to coordinate the pricing and inventory replenishment decisions in each period to maximize its total discounted profit over a finite planning horizon we develop the general model and characterize the optimal policies for two special scenarios namely a model with inventory carryover and no fixed price change costs and a model with fixed price change costs and no inventory carryover finally we propose an intuitive heuristic policy to tackle the general system whose optimal policy is expected to be very complicated our numerical studies show that this heuristic policy performs well

costs demand and producer price changes abstract using business survey data we estimate an ordered probit model to explain the occurrence of producer price increases and decreases in the french manufacturing industry our results show that changes in intermediate input prices are the main driver of producer price changes changes in firms labor costs their production level or the producer price index of their industry contribute less to the occurrence of price changes moreover when they face a change in their costs firms adjust their prices upward more often and more rapidly than they do it downward especially when the shock is perceived as permanent

identity and the economics of organizations on plebes first day at west point called r day they strip down to their underwear their hair is cut off they are put in uniform they then must address an older cadet with the proper salute and with the statement sir new cadet doe reports to the cadet in the red sash for the first time as ordered plebes must stand and salute and repeat and stand and salute and repeat until they get it exactly right all the while being reprimanded for every tiny mistake in the summary of david lipsky 2003 pp 145 154 who spent four years tracking a company of cadets at west point on r day you surrender your old self in stages but r day is just the beginning of the training and personal re engineering that is to come so that west point graduates emerge four years later as loyal officers in the u s army lipsky shows that despite some failure this tough program is remarkably successful in creating officers with the will to lead in battle economists current picture of organizations and work incentives has no place for the west point program and the motivations it seeks to inculcate in recruits in a standard economic model an individual s preferences are fixed and utility depends only on pecuniary variables the army s aim at west point is to change cadets preferences they wish to inculcate non economic motives in the cadets so that they have the same goals as the u s army alternatively stated the goal of west point is to change the identity of the cadets so they will think of themselves above all else as officers in the u s army they will feel bad about themselves they will lose utility if they fall short of the ideals of such an officer this change in identity

health insurance and retirement of married couples summary most health insurance in the usa is provided by employers until eligibility for public health insurance medicare begins at age 65 retiring before 65 exposes workers who lack retiree health insurance coverage to the risk of catastrophic medical expenditure we solve and estimate a dynamic model of the employment behavior of older married couples that includes risky medical expenditure and health insurance parameter estimates imply that the risk reducing feature of health insurance can account for about half of the observed association between retiree health insurance and employment for married men but can account for only one tenth of the much larger observed association for married women policy simulations imply very small effects on employment of changing the age of eligibility for medicare from 65 to 67 copyright 2006 john wiley sons ltd

the morphology of price dispersion this paper is a study of the shape and structure of the distribution of prices at which an identical good is sold in a given market and time period we find that the typical price distribution is symmetric and leptokurtic with a standard deviation between 19 and 36 only 10 of the variance of prices is due to variation in the expensiveness of the stores at which a good is sold while the remaining 90 is due in approximately equal parts to differences in the average price of a good across equally expensive stores and to differences in the price of a good across transactions at the same store we show that the distribution of prices that households pay for the same bundle of goods is approximately normal with a standard deviation between 9 and 14 half of this dispersion is due to differences in the expensiveness of the stores where households shop while the other half is mostly due to differences in households choices of which goods to purchase at which stores we find that households with fewer employed members pay lower prices and do so by visiting a larger number of stores rather than by shopping more frequently

mergers when firms compete by choosing both price and promotion enforcement agencies have a relatively good understanding of how to measure the loss of price competition caused by merger however when firms compete in multiple dimensions merger effects are not well understood in this paper we study mergers in industries where firms compete by setting both price and promotion and ask what happens if we mistakenly assume that price is the only dimension of competition to answer the question we build a structural model of the super premium ice cream industry where a 2003 merger between haagen dazs and dreyer s was challenged by the federal trade commission a structural merger model that ignores promotional competition underpredicts the price effects of a merger in this industry 5 instead of 12 about three fourths of the difference can be attributed to estimation bias estimated demand is too elastic with the remainder due to extrapolation bias from assuming post merger promotional activity stays constant instead it declines

sale rates and price movements in art auctions this paper examines the relationship between sale rates and price shocks in art auctions using data on contemporary and impressionist art we show that while sale rates appear to have little relationship to current prices there exists a strong negative relationship of sale rates to unexpected price shocks which is reminiscent of a phillips curve we estimate an empirical model that suggests that the reserve price is set on average at about 70 of the low estimate

how auctions work for wine and art interview auctioneers and even to buy a little wine in the meantime i have also had the opportunity with john abowd 1988 to observe and collect data on the auction sale of impressionist and contemporary paintings this paper reports on some of the empirical regularities that i and others have observed in the actual operation of the auction markets for these items in view of the rich and diverse array of theoretical literature on auctions it seems high time economists began to spell out precisely what facts it is meant to explain 2

an equilibrium search model of synchronized sales we demonstrate the existence of periodic nonstationary equilibria with self generating cycles in a simple model of random search our results provide a theory of synchronized sales based on product market search by heterogeneous consumers that is our model explains how it can be optimal for all sellers to follow a repeated pattern of posting a high price for several periods and then posting a low price for one period

estimating a structural search model the transition from school to work this paper presents a finite horizon search model that is econometrically implemented using all of the restrictions impli ed by the theory following a sample of male high school graduates fr om the youth cohort of the national longitudinal surveys from graduat ion to employment search parameters are estimated reservation wages and offer probabilities are estimated to be quite low simulations a re performed of the impact of changing the parameters on the expected duration of unemployment copyright 1987 by the econometric society

art market inefficiency art is often used as an investment vehicle given the importance of market efficiency in finance we use a large auction based index to test whether the art market is weakly efficient evidence reveals that returns on artworks exhibit high positive auto correlation we attribute this result to price truncation resulting from unobservable reserve prices in auctions we conclude that the art market is not efficient mainly because price formation is opaque to outsiders who lack information on unsold artworks

social motives in intergroup conflict group identity and perceived target of threat we experimentally test the social motives behind individual participation in intergroup conflict by manipulating the perceived target of threat groups or individuals and the symmetry of conflict we find that behavior in conflict depends on whether one is harmed by actions perpetrated by the out group but not on one s own influence on the outcome of the out group the perceived target of threat dramatically alters decisions to participate in conflict when people perceive their group to be under threat they are mobilized to do what is good for the group and contribute to the conflict on the other hand if people perceive to be personally under threat they are driven to do what is good for themselves and withhold their contribution the first phenomenon is attributed to group identity possibly combined with a concern for social welfare the second phenomenon is attributed to a novel victim effect another social motive reciprocity is ruled out by the data

inventories sticky prices and the persistence of output and inflation post war business cycle fluctuations of output and inflation are remarkably persistent many recent sticky price models however grossly underpredict this persistence we assess whether adding inventories to a standard sticky price model raises the persistence of output and inflation for this addition we consider a shopping cost model in the model consumers find shopping activities costly and the cost of shopping depends on the stock of goods available in this context producers manage inventories to smooth production and to affect the cost of shopping we find that the shopping cost model generates a persistence for output and inflation that matches the persistence observed in the post 1985 us data

pass through in retail and wholesale this paper studies how prices comove across products firms and locations to gauge the relative importance of retailer versus manufacturer level shocks in determining prices i make use of a large panel data set on prices for a cross section of retailers in the u s i analyze prices at the barcode or universal product code upc level for individual stores i find that only 16 of the variation in prices is common across stores selling an identical product 65 of the price variation is common to stores within a particular retail chain but not across retail chains while 17 is completely idiosyncratic to the store and product product categories with frequent temporary sales exhibit a disproportionate amount of completely idiosyncratic price variation my results suggest that most of the observed price variation arises from retail level rather than manufacturer level demand and supply shocks however the behavior of prices is difficult to relate to observed variation in costs and demand at the retail level this suggests that retail prices may vary largely as a consequence of dynamic pricing strategies on the part of retailers or manufacturers rather than static demand and supply shocks this abstract was borrowed from another version of this item

art as an investment the market for modern prints repeat sales of modern prints at auction are used to estimate a semiannual index of prices for the period 1977 92 as in other studies of art as an investment prints do not compare favorably to traditional financial assets there is substantial noise in auction prices but little or no support for the proposition that some artists command higher prices in certain countries or that masterpieces outperform the market one puzzle is the continuing tendency for prices realized at certain auction houses to exceed those realized at others notably at sotheby s relative to christie s in new york copyright 1993 by american economic association

an estimable dynamic stochastic model of fertility and child mortality this paper develops a finite horizon dynamic stochastic model of discrete choice with respect to life cycle fertility within an environment where infant survival is uncertain the model yields implications for the number timing and spacing of children a tractable estimation method is developed for the linear constraint quadratic utility case that is intimately tied to the dynamic optimization problem and the method is applied to malaysian household data estimation is based on integrating the numerical solution of the dynamic programming model of behavior with a maximum likelihood procedure

school spirit legislator school ties and state funding for higher education abstract we explore a new mechanism to understand state funding for public colleges and universities by leveraging data on the educational experiences of state legislators specifically if and where they received postsecondary education using novel hand collected data from 2002 through 2014 we provide comprehensive documentation for the first time in the literature on the educational backgrounds of state legislators we find a statistically significant positive association between the share of legislators who attended their states public institutions and state funding for their entire public higher education system we also find a similar positive relationship between the share of state legislators who attended particular campuses of the state s public university system and funding for those campuses this relationship is more pronounced among publicly educated legislators who represent legislative districts close to their alma mater s district and becomes most consequential when the legislator s district contains his or her alma mater we discuss the implications of our findings for academic studies on how politics and legislators personal experiences influence support for higher education

inventories markups and real rigidities in menu cost models a growing consensus in new keynesian macroeconomics is that nominal cost rigidities rather than countercyclical markups account for the bulk of the real effects of monetary policy shocks we revisit these conclusions using theory and data on inventories we study an economy with nominal rigidities in which goods are storable our theory predicts that if costs of production are sticky and markups do not vary much in response to say expansionary monetary policy firms react by excessively accumulating inventories in anticipation of future cost increases in contrast if the data inventories are fairly constant over the cycle and in response to changes in monetary policy we show that costs must increase and markups must decline sufficiently in times of a monetary expansion in order to reduce firm s incentive to hold inventories and thus bring the model s inventory predictions in line with the data versions of the model consistent with the dynamics of inventories in the data imply that countercyclical markups account for a sizable fraction of the response of real variables to monetary shocks

five facts about prices a reevaluation of menu cost models are price decreases 3 the frequency of price increases covaries strongly with inflation whereas the frequency of price decreases and the size of price increases and price decreases do not 4 the frequency of price change is highly seasonal it is highest in the first quarter and then declines 5 we find no evidence of upwardsloping hazard functions of price changes for individual products we show that the first second and third facts are consistent with a benchmark menu cost model whereas the fourth and fifth facts are not

sticky prices new evidence from retail catalogs this paper presents new results on the size frequency and synchronization of price changes for twelve selected retail goods over the past 35 years three basic facts about the data are uncovered first nominal prices are typically fixed for more than one year although the time between changes is very irregular second prices change more often during periods of high overall inflation third when prices do change the sizes of the changes are widely dispersed both large and small changes occur for the same item and the sizes of these changes do not closely depend on overall inflation

monitoring motivation and management the determinants of opportunistic behavior in a field experiment economic models of incentives in employment relationships are based on a specific theory of motivation employees are rational cheaters who anticipate the consequences of their actions and shirk when the marginal benefits exceed costs we investigate the rational cheater model by observing how experimentally induced variation in monitoring of telephone call center employees influences opportunism a significant fraction of employees behave as the rational cheater model predicts a substantial proportion of employees however do not respond to manipulations in the monitoring rate this heterogeneity is related to variation in employee assessments of their general treatment by the employer jel d2 j2 l2 l8 m12

auctions and the price of art the value of most important works of art is established by public auction either directly by an actual sale or indirectly by reference to other sales how the auction system works is thus a critical determinant of how the public s preferences are translated into the evaluation of artistic work the auction system is central in the determination of the incentives for artistic work and the efficiency of the auction system is a key determinant of the cost of creating and distributing works of art this paper contains a review of the burgeoning new research of the last decade that has been designed to shed light on how the art auction system actually works what it indicates about price formation and how well it performs we begin our discussion in section 2 with a short description of the mechanics of the auction system and then organize the remainder of our discussion around two major topics the first topic concerns how auction prices can be used to determine and compare overall price movements within the art market and other markets and the second topic concerns how the auction mechanism influences prices we

principals preferences for agents with social preferences abstract this study explores a nested representation of ethical moral social identity motivated opportunistic and reciprocal agent preferences to characterize screening contracts in a principal agent model under adverse selection this leads to a ranking of the type of social preferences that principals should seek in agents based upon the information rents associated with each agent type when moral hazard is introduced the ranking further depends upon the interaction of limited liability with self selection these results are interpreted in light of the 2010 dodd frank act and principal agent experiments

supermarket choice and supermarket competition in market equilibrium multi store firms are common in the retailing industry theory suggests that cross elasticities between stores of the same firm enhance market power to evaluate the importance of this effect in the u k supermarket industry we estimate a model of consumer choice and expenditure using three data sources profit margins for each chain a survey of consumer choices and a data set of store characteristics to permit plausible substitution patterns the utility model interacts consumer and store characteristics we measure market power by calculating the effect of merger and demerger on nash equilibrium prices demerger reduces the prices of the largest firms by between 2 and 3 8 depending on local concentration mergers between the largest firms lead to price increases up to 7 4

sticky price models and durable goods the inclusion of a durable goods sector in sticky price models has strong and unexpected implications even if most prices are flexible a small durable goods sector with sticky prices may be sufficient to make aggregate output react to monetary policy as though most prices were sticky in contrast flexibly priced durables with sufficiently long service lives can undo the implications of standard sticky price models in a limiting case flexibly priced durables cause monetary policy to have no effect on aggregate output our analysis suggests that durable goods prices are the most relevant data for calibrating price rigidity jel e21 e23 e31 e52

the magnitude of menu costs direct evidence from large u s supermarket chains we use store level data to document the exact process of changing prices and to directly measure menu costs at five multistore supermarket chains we show that changing prices in these establishments is a complex process requiring dozens of steps and a nontrivial amount of resources the menu costs average 105 887 year per store comprising 0 70 percent of revenues 35 2 percent of net margins and 0 52 price change these menu costs may be forming a barrier to price changes specifically 1 a supermarket chain facing higher menu costs due to item pricing laws that require a separate price tag on each item changes prices two and one half times less frequently than the other four chains 2 within this chain the prices of products exempt from the law are changed over three times more frequently than the products subject to the law in principle fixed costs of changing prices can be observed and measured in practice such costs take disparate forms in different firms and we have no data on their magnitude so the theory can be tested at best indirectly at worst not at all alan blinder 1991 p 90

the dynamics of markups and inventories in retailing firms this paper is concerned with the interaction between price and inventory decisions in retailing firms and its implications for the dynamics of markups and the existence of sales pro motions we consider a model where a monopolistically competitive retailer decides price and inventories and assumes lump sum costs when placing orders or changing nominal prices tn this model the existence of stockout probabilities and fixed ordering costs generate a cyclical price behaviour characterized by long periods without nominal price changes and short periods with very low prices i e sales promotions we estimate this model using a unique longitudinal dataset with information about retail and wholesale prices inventories orders and sales for several brands in a supermarket chain based on the estimated model we perform several counterfactual experi ments that show the important role that inventories and fixed ordering costs play in the dynamics of retail prices and the frequency of sales promotions in this dataset

inventories and the automobile market this article studies the within model year pricing production and inventory management of new automobiles using new monthly data on u s transaction prices we document that for the typical vehicle prices fall over the model year at a 9 0 annual rate concurrently both sales and inventories are hump shaped to explain these time series we formulate an industry model for new automobiles in which inventory and pricing decisions are made simultaneously the model predicts that automakers build to stock inventory management policy substantially influences the time series of prices and sales accounting for four tenths of the price decline observed over the model year

the specification and estimation of dynamic stochastic discrete choice models a survey our main goal is to quantify the returns to a career in the united states congress we specify a dynamic model of career decisions of a member of congress and estimate this model using a newly collected dataset given estimates of the structural model we

a new test for monopoly with limited cost data abstract the test s intuition is that demand estimates in isolation may diverge from demand estimates under joint estimation with cost if the monopoly null hypothesis is false simulations indicate that the test can have substantial power using duopoly data

economies of scope in price setting a moment inequalities estimation abstract using weekly data on prices costs and units sold by a supermarket chain a moment inequalities approach is used to estimate a discrete choice dynamic model of a multiproduct firm facing menu costs this empirical methodology allows to estimate two types of fixed costs of price adjustment costs that are independent of the number of items that change prices and costs that are incurred at each item s price change i find that both types of menu costs exist and are substantial the total cost of changing prices is estimated to be bounded between 0 3 and 1 3 of revenues and between 17 and 65 of net margins the first type of fixed cost accounts for between 23 and 99 of this expense pointing to substantial economies of scope in price setting

the timing of sales this paper presents a model of intertemporal price discrimination a fixed number of sellers produce a homogeneous good consumers with different preferences enter the market in each period and leave when they make a purchase the sellers typically vary their prices over time charging a high price in most periods but occasionally cutting the price to sell to a large group of customers with a low reservation price in some equilibria all stores lower their price at the same time and to the same level

identity supervision and work groups i want to tell my foreman to f off but i can t so says mike a steel handler we meet in stud terkel s book working 1974 xxxv many workers stories we read in working and in ethnographies suggest workers greatly resent supervision as a result they exert lower effort and may sabotage production mike puts dents in the steel ethnographies also reveal workers who are not strictly monitored develop work group output norms this paper uses the con cept of identity to study trade offs in supervi sory policy 1 we follow the social psychology literature and examine intrinsic incentives that depend on how workers see themselves in rela tion to the firm when a supervisor monitors workers workers adopt an identity in opposition to the firm the firm gains information and can fine tune its incentive pay but resentful workers require high compensation to work in the firm s interest with no monitoring workers are less hostile to the firm but they may forge a work group identity with norms that restrict output we show that a firm may find it profitable to have lax supervision when workers take on a work group identity the cost per unit of effort can be lower than when workers view them selves in opposition to the firm we shall present the model and then discuss some classic studies of workplaces that portray these trade offs our identity framework synthesizes an emerg ing body of economic theory and empirics on incentives and monitoring e g bruno frey 1993 gary charness 2000 daniel s nagin et al 2002 michael t rauh and giulio seccia 1 this paper provides a simple formal model of tradeoffs described loosely in akerlof and kranton 2005 we also discuss further implications of supervision versus work group cohesion

estimating the impact of consumer expectations of coupons on purchase behavior a dynamic structural model we examine the basic premise that consumers may anticipate future promotions and adjust their purchase behavior accordingly we develop a structural model of households who make purchase decisions to minimize their expenditure over a finite period the model allows for future expectations of promotions to enter the purchase decision households with adequate inventory of the product may face a trade off of buying in the current period with a coupon or defer the purchase until next period given their expectations of future promotions thus we provide a framework for examining the impact of consumer expectations on choice behavior the target audiences for our paper are a empirical researchers who intend to make structural models part of their applied research agenda and b managers who value and seek to understand the impact of consumers coupon expectations on current purchase behavior our research objective is to provide an empirical framework to examine whether and to what extent consumers anticipate future coupon promotions and adjust purchase behavior the central premise of our approach is that a rational consumer minimizes the present discounted value of the cost of a purchase where cost in a single period consists of purchase price inventory holding cost gains from coupons and potential stockout cost we aim to test whether our hypotheses regarding the various elements of the cost structure are supported and that whether consumers take into account future discounted cost when making current purchase decisions the research methodology we adopt is relatively new in econometrics and known as the estimable stochastic structural dynamic programming method the methodology amounts to incorporating a maximum likelihood routine embedded in a dynamic programming problem the dynamic programming problem is solved several times within a maximum likelihood iteration for each value of the state space elements and for each value of the parameters in the parameter set the state space in our model consists of purchase and nonpurchase alternatives in each time period coupon availability and no coupon availability in each time period level of inventory in each time period for each household and consumption rate of each household we use scanner panel data on purchases in the disposable diaper product category and promotions we estimate the inventory holding and stockout costs brand specific value of coupons and consumers expectations of future coupons the key insights and lessons learned can be summarized as follows 1 our results are consistent with the notion that consumers hold beliefs about future coupons and that such beliefs affect the purchase decision we find that the dynamic optimization model performs significantly better than a single period optimization model and a naive benchmark model 2 we find a high and significant stockout cost consistent with the essential nature of the product category our estimate of the holding cost yields a reasonable annualized percentage value when converted to the cost of capital we find that consumer valuation of coupons differ markedly across brands 3 our empirical evidence supports the notion that consumers hold beliefs about future coupon availability we also find that the expectations about future coupons estimated endogenously differ depending upon whether or not a coupon was available in the current period thus the proposed model structure yields rich managerial insights and facilitates several what if scenarios a possible limitation of our model and estimable structural models in general is the computational cost while it is possible to conceptually extend the state space to accommodate variations across households and add a richer parameter structure each addition multiplies the size of the state space and the computation time for this reason we have kept the state space as tight as possible and refrained from additions that would otherwise enable us to incorporate heterogeneity in consumer decisions for example we assumed that consumers are similar other than reflected by their purchase behavior we built a category purchase incidence model rather than a brand choice model we refrained from including unobserved heterogeneity in the parameters we chose to opt out of modeling autocorrelation and other time dependent error term patterns in the likelihood function thus we have made an effort to build a structural model that reasonably reflects consumer purchase behavior without requiring expensive computation currently there are developments in econometrics to approximate the computation of the valuation functions without sacrificing much accuracy when these methods are well developed we expect that structural models will become more commonplace in marketing

anti social behavior in profit and nonprofit organizations abstract two types of intrinsically motivated workers are considered good workers care about the mission of an organization whereas bad workers derive pleasure from destructive behavior compared to the case with only good motivated workers the mission oriented sector has to resort to higher monitoring to deter bad workers from entering the sector in equilibrium bad workers work in the for profit sector where they behave like normal people while good workers self select into the mission oriented sector in the profit oriented sector both monitoring and bonus payments for good behavior increase to control the damage caused by bad workers the results of the paper are illustrated by examples from child care and the threat posed by pedophiles in this sector

accounting for incomplete pass through recent theoretical work has suggested a number of potentially important factors in causing incomplete pass through of exchange rates to prices including markup adjustment local costs and barriers to price adjustment we empirically analyze the determinants of incomplete passthrough in the coee industry the observed pass through in this industry replicates key features of pass through documented in aggregate data prices respond sluggishly and incompletely to changes in costs we use microdata on sales and prices to uncover the role of markup adjustment local costs and barriers to price adjustment in determining incomplete pass through using a structural oligopoly model that nests all three potential factors the implied pricing model explains the main dynamic features of short and long run pass through local costs reduce long run pass through by a factor of 59 relative to a ces benchmark markup adjustment reduces pass through by an additional factor of 33 where the extent of markup adjustment depends on the estimated super elasticity of demand the estimated menu costs are small 0 23 of revenue and have a negligible eect on long run pass through but are quantitatively successful in explaining the delayed response of prices to costs we nd that delayed passthrough in the coee industry occurs almost entirely at the wholesale rather than the retail level

optimum pricing policy under stochastic inflation we describe aggregate inflation as a stochastic process in which the rate of change of the price level can be positive or zero where the times spent in each state are of random duration this class of processes includes two state markov chains and renewal processes as special cases it is shown that the optimal pricing policy of a monopolistic firm with non convex costs of price adjustment is s s in its real price i e its nominal price relative to the price level a basic certainty equivalence result is proved i e the firm behaves as if it faces a certain and fixed rate of inflation higher than the actual expected rate the difference between the two rates being a risk premium which depends on the real interest rate and the parameters of the stochastic process one can thus apply previous results from the case of certainty sheshinski and weiss review of economic studies 1977 to obtain comparative static results in particular one finds that an increase in the variance of expected inflation leads firms to choose a pricing policy with larger amplitude in real price the paper also addresses the question of consistency in firms expectations when the price level is determined by the firms actions in this paper we consider pricing policies of individual firms in an inflationary environment each firm expects the general price level to increase and must determine the rate of increase of its own price it is assumed that the firm incurs an adjustment cost when it changes its nominal price consequently firms choose to change prices occasionally rather than continuously

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

sales and consumer inventory temporary price reductions sales are common for many goods and naturally result in a large increase in the quantity sold we explore whether the data support the hypothesis that these increases are at least partly due to demand anticipation at low prices consumers store for future consumption this effect if present has broad economic implications we test the predictions of an inventory model using scanner data with two years of household purchases the results are consistent with an inventory model and suggest that static demand estimates may overestimate price sensitivity

the impact of reserve prices on the perceived bias of expert appraisals of fine art we examine whether the expert appraisals provided to bidders before major art auctions are unbiased indicators of market value despite a strong grounding in theory this aspect of optimal auction design has been frequently challenged in previous empirical research particularly in the market for fine art we adopt a valuation benchmark that incorporates sellers reservation prices as well as high bids and recognize latent censoring due to works that fail to make reserve although the auction houses never divulge sellers reserve prices which are therefore unobservable we exploit the fact that they can be observed indirectly via their impact on buy in rates using the set of french impressionist paintings brought to auction from 1985 to 2001 we estimate the distribution of seller reserve prices establish their link to a proper valuation benchmark and isolate the selection bias due to bought in works on the perceived market value of fine art works brought to auction after controlling for the impact of reservation prices and considering all works brought to auction and therefore all works appraised we find no evidence of bias in the experts pre sale estimates

the dynamic efficiency costs of common pool resource exploitation we conduct the first empirical investigation of common pool resource users dynamic and strategic behavior at the micro level using real world data fishermen s strategies in a fully dynamic game account for latent resource dynamics and other players actions revealing the profit structure of the fishery we compare the fishermen s actual and socially optimal exploitation paths under a time specific vessel allocation policy and find a sizable dynamic externality individual fishermen respond to other users by exerting effort above the optimal level early in the season congestion is costly instantaneously but is beneficial in the long run because it partially offsets dynamic inefficiencies jel d24 q21 q22

price dispersion and demand uncertainty evidence from u s scanner data i use the prescott 1975 hotels model to explain variations in price dispersion across items sold by supermarkets in chicago the effect of demand uncertainty on price dispersion is highly significant and quantitatively important my estimates suggest that more than 40 of the cross sectional standard deviation of log prices is due to demand uncertainty i also find that price dispersion measures are negatively correlated with the average price but are not negatively correlated with the revenues from selling the good across stores and weeks and with the number of stores that sell the good temporary sales are modeled as a reaction to unwanted inventories that are accumulated when the realization of demand is low the effect of demand uncertainty on the frequency of temporary sales is also highly significant and quantitatively important items with more demand uncertainty tend to accumulate unwanted inventories more often and tend to have temporary sales more often

magazine prices revisited this paper examines price adjustment behaviour in the magazine industry in a frequently cited study cecchetti 1986 constructs a reduced form s s model for firms cecchetti assumes that a firm s pricing rules are fixed for non overlapping three year intervals and estimates the model using a conditional logit specification from chamberlain 1980 the estimates are inconsistent however due to the duration dependent specification of the model two alternative specifications are used to obtain consistent estimation the consistent estimates continue to provide strong evidence in favour of state dependent pricing models but only weak evidence on the behaviour of price adjustment costs copyright 2006 john wiley sons ltd

why are prices sticky the dynamics of wholesale gasoline prices the menu cost interpretation of sticky prices implies that the probability of a price change should depend on the past history of prices and fundamentals only through the gap between the current price and the frictionless price we find that this prediction is broadly consistent with the behavior of nine philadelphia gasoline wholesalers nevertheless we reject the menu cost model as a literal description of these firms behavior arguing instead that price stickiness arises from strategic considerations of how customers and competitors will react to price changes

retail sales of durable goods inventories and imports after large devaluations abstract this paper presents a general equilibrium model of a small open economy with monopolistically competitive retailers inventories and durable goods following large devaluations this model generates a collapse of imports a fall of retail sales and inventories and a gradual increase in retail prices besides the model provides an explanation for a short lived spike in retail sales of durable goods observed during the recent devaluation episode in russia in december of 2014

a structural approach to identifying the sources of local currency price stability the inertia of the local currency prices of traded goods in the face of exchange rate changes is a well documented phenomenon in international economics this paper develops a structural model to identify the sources of this local currency price stability and applies it to micro data from the beer market the empirical procedure exploits manufacturers and retailers first order conditions in conjunction with detailed information on the frequency of price adjustments following exchange rate changes to quantify the relative importance of local non traded cost components markup adjustment by manufacturers and retailers and nominal price rigidities in the incomplete transmission of such changes to prices we find that on average approximately 60 of the incomplete exchange rate pass through is due to local non traded costs 8 to markup adjustment 30 to the existence of own brand price adjustment costs and 1 to the indirect strategic effect of such costs though these results vary considerably across individual brands according to their market shares

gender discrimination in job ads evidence from china we study explicit gender discrimination in a population of ads on a chinese internet job board gender targeted job ads are common favor women as often as men and are much less common in jobs requiring higher levels of skill employers relative preferences for female versus male workers on the other hand are more strongly related to the preferred age height and beauty of the worker than to job skill levels almost two thirds of the variation in advertised gender preferences occurs within firms and one third occurs within firmoccupation cells overall these patterns are not well explained by a firm level animus model by a glass ceiling model or by models in which broad occupational categories are consistently gendered across firms instead the patterns suggest a model in which firms have idiosyncratic preferences for particular job gender matches which are overridden in skilled positions by factors such as thinner labor markets or a greater incentive to search broadly for the most qualified candidate jel codes j16 j63 j71 copyright 2013 oxford university press

job matching and occupational choice this paper presents a model of job matching the generalizes the existing literature by allowing for different jobs types or occupations such differences affect the value of job specific experience inducing a career profile where certain types are sampled before others more specifically the analysis shows that it is optimal for the young and inexperienced to gravitate toward jobs exhibiting a certain kind of risk then after deriving the equilibrium job turnover rate for an economy in which people do not switch occupations panel data are used to estimate its underlying parameters the hypothesis that people do not switch occupations is rejected against the alternative that they do thus providing empirical support for the theoretical extension undertaken here

storable good monopoly the role of commitment we study dynamic monopoly pricing of storable goods in an environment where demand changes over time the literature on durables has focused on incentives to delay purchases our analysis focuses on a different intertemporal demand incentive for consumers the key force on the consumer side is advance purchases or stockpiling this stockpiling motive can be present in the case of standard durables as well in environments unmodeled in the prior literature we show that if the monopolist cannot commit then prices are higher in all periods and social welfare is lower than in the case in which the monopolist can commit this is in contrast with the durable goods analysis in the literature on the coase conjecture

the response of prices sales and output to temporary changes in demand we determine empirically how the big three automakers accommodate shocks to demand they have the capability to change prices alter labor inputs through temporary layoffs and overtime or adjust inventories these adjustments are interrelated non convex and dynamic in nature combining weekly plant level data on production schedules and output with monthly data on sales and transaction prices we estimate a dynamic profit maximization model of the firm using impulse response functions we demonstrate that when an automaker is hit with a demand shock sales respond immediately prices respond gradually and production responds only after a delay the size of the immediate sales response is linear in the size of the shock but the delayed production response is non convex in the size of the shock for sufficiently large shocks the cumulative production response over the product cycle is an order of magnitude larger than the cumulative price response we examine two recent demand shocks the ford explorer firestone tire recall of 2000 and the september 11 2001 terrorist attacks