how price promotions influence postpurchase consumption experience over time the current research examines how price promotions influence postpurchase hedonic consumption experience on the one hand getting a good deal can elevate moods and dampen the pain of payment thus enhancing consumption enjoyment on the other hand discounts also reduce sunk cost considerations and the need to recover one s spending as a result price promotions can lower attention during consumption which in turn diminishes consumption enjoyment the authors posit that the time delay between payment and consumption plays an important role in determining the relative strength of these competing effects four experiments involving real spending and consumption demonstrate that when consumption occurs immediately after payment discounts make consumption more enjoyable however this pattern reverses when consumption is delayed the experiments provide support for the roles of feelings and attention respectively in accounting for these effects while ruling out several alternative explanations including perceived quality absolute paid price and a direct sunk cost account

trade offs and depletion in choice abstract four experiments examine why choices deplete executive resources the authors show that the resolution of trade offs is a driver of depletion effects arising from choice and the larger the trade offs the greater is the depletion effect the authors also find that choice difficulty not related to trade offs does not influence the depleting effect of the choices finally the authors find that though people can intuit some depletion effects they do not intuit that choices or trade offs within choices might be depleting and therefore fail to predict that larger trade offs are more depleting

social defaults observed choices become choice defaults defaults effects can be created by social contexts the observed choices of others can become social defaults increasing their choice share social default effects are a novel form of social influence not due to normative or informational influence participants were more likely to mimic observed choices when choosing in private than in public experiment 1 and when stakes were low rather than high experiment 2 like other default effects social default effects were greater for uncertain rather than certain choices experiment 3 and were weaker when choices required justification experiment 4 social default effects appear to occur automatically as they become stronger when cognitive resources are constrained by time pressure or load and they can be sufficiently strong to induce preference reversals experiments 5 and 6

interactions of factors impacting implementation and sustainability of renewable energy sourced electricity abstract two renewable energy sourced electricity res e technologies are at the forefront of the current energy transition away from fossil fuels wind and solar photovoltaic however res e must overcome implementation and sustainability challenges from factors identified in economic policy societal technological and environmental dimensions res e diffusion is also a complex problem and this critical review suggests that outcomes depend on interdependencies between factors within a single or across multiple dimensions four categories of interactivity have been identified higher capital costs or market inequalities associated with the economic dimension of res e drive supportive policies or incentives in the policy dimension in the policy policy category interactions between res e demand or supply side incentives influence electricity pricing energy market mixes or greenhouse gases emissions the society technology category examines societal technological interactions at both micro and macro scales the environment technology category details interactions between res e and the environment the technology technology category examines synergies between res e when collocated with conventional electricity generation technologies this review identified several knowledge gaps first research on res e implementation lacks system level analyses on the impact of interactions on project outcomes a well developed line of research examines interactions between multiple simultaneous supportive policies on res e implementation in developed nations however a second gap exists on the understanding of these interactions in developing nations a third gap exists on evaluating the impact of technological lock in this includes the impact on res e implementation rates when the complex economic policy governance and societal factors implicated in lock in are removed

public private partnerships for energy efficiency projects a win win model to choose the energy performance contracting structure abstract to stimulate private sector investments and promote energy efficiency in recent years through public private partnership arrangements the public sector uses private companies the energy service company esco to perform one or more activities related to the provision of energy services and the contractual arrangements defining the contracting parties obligations and rights are traditionally based on energy performance contracting epc although epc is a valuable model for delivering public energy efficiency projects the adoption is still far from its vast potential mainly because of two unresolved issues the dilemma of equally sharing the benefits between the public and private parties so as assuring a win win condition and the lack of adequate public procedures that support the selection of the most appropriate epc schema given certain circumstances and projects characteristics the existing literature have analyzed the advantages of epc mechanism for delivering energy efficiency projects and explored the critical success factors of epc however it does not provide any solution to address the issues that hamper the adoption of epcs in public sector to fill this gap this paper proposes a model for assessing and benchmarking the net benefits of the different epc structures so as choosing the epc schema that creates a win win solution for both the esco and the government by balancing the private sector s profitability needs and the public sector s economic interests the assessment of the benefits of the epc schema for contractual parties and the benchmark among the contracts are based on an economic approach which expresses the net benefit gained by each party through the three epc contracts in monetary terms and benchmarks the three epc schema through the net present value npv method the win win condition is ensured by the contract that minimizes the difference between the net profits npv gained by the contractual parties this will support the public authority in the decision making process about the epc structure to be adopted to develop an energy efficiency project as a ppp to demonstrate the applicability of the proposed model we apply it to an energy efficiency project launched by the municipality of noci southern italy

cultural differences in consumer impatience abstract in this article the authors examine cross cultural variations in how people discount the future specifically they predict that people from western cultures are relatively less patient and therefore discount the future to a greater degree than do people from eastern cultures and thus westerners value immediate consumption relatively more furthermore on the basis of regulatory focus theory the authors predict that when easterners are faced with the threat of a delay in receiving a product i e a prevention loss they are more impatient whereas when westerners are faced with the threat of not being able to enjoy a product early i e a promotion loss their impatience increases this enhanced impatience manifests in preference for expedited consumption of a product purchased online in two studies in both studies the authors used a priming methodology on bicultural singaporean participants the results support the predictions in the second study they also found evidence in support

learning theory and the logic of critical mass the oliver marwell theory of critical mass is a prominent solution to the free rider problem that plagues collective action in large groups i reformulate the theory as a stochastic learning model in which cooperative responses are shaped by the social sanctions and cues generated by the responses of others this relaxes four assumptions in the original formulation that the actors are rational decisions are isolated events outcomes are deterministic and public goods have pure jointness of supply and collective profit computer simulations then show how adaptive actors become trapped in a suboptimal equilibrium and how they escape through attainment of critical mass start up problems arise from accommodation to social costs and not from low returns to early contributors as previously believed simulations also identify a new dilemma of group size and show why solidarity tends to emerge in response to crisis finally normative solidarity appears to be a consequence rather than cause of critical mass but may promote recovery from random deviance

world wide non mandatory involvement of electricity utilities in the promotion of energy efficiency and the portuguese experience abstract the interest in the promotion of energy efficiency by utilities at the demand side started in the seventies caused by the high prices of oil and suffered a drastic set back during the restructuring of the electricity sector however growing awareness on the positive effects of energy efficiency on the economy and on the environment led many countries jurisdictions to impose utilities engagement in the promotion of energy efficiency in other countries jurisdictions utilities encourage their customers to improve energy efficiency on a non mandatory basis in this paper the non mandatory involvement of electric utilities in the promotion of energy efficiency at the demand side is addressed some world wide examples are given detailing the portuguese experience although this participation is important it seems that countries jurisdictions with regulatory impositions obtain more satisfying results

the effects of effort and intrinsic motivation on risky choice people often need to trade off between the probability and magnitude of the rewards that they could earn for investing effort the present paper proposes that the conjunction of two simple assumptions relating effort induced reward expectations to prospect theory s value function provides a parsimonious theory that predicts that the nature of the required effort will have a systematic effect on such trade offs using the case of frequency or loyalty programs a series of five studies involving both real and hypothetical choices demonstrated that a the presence as opposed to absence of effort requirements enhances the preference for sure small rewards over large uncertain rewards b the preference for reward certainty is attenuated when the effort activity is intrinsically motivating and c continuously increasing the effort level leads to an inverted u effect on the preference for sure small over largeuncertain rewards the studies also employ process measures and examine the mechanisms underlying the impact of the effort stream on the trade off between the certainty and magnitude of rewards the final section discusses the theoretical implications of this research as well as the practical implications with respect to frequency programs and other types of incentive systems

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

a new solution to the collective action problem the paradox of voter turnout macy s work offers a potential solution to the paradox of voter turnout the stochastic learning theory of voter turnout kanazawa 1998 posits that citizens perceive a correlation between their behavior voting versus abstention and the outcome of collective action win versus loss for their candidate and that they interpret the outcome as a reinforcer or a punisher the theory can solve the paradox of voter turnout because now p the probability that one s vote is or appears decisive equals approximately 500 in the calculus of voting model instead of p 0 i use general social survey data to test the theory the empirical results indicate that citizens make their turnout decisions according to the win stay lose shift pattern predicted by the stochastic learning theory especially if there are no strong third party candidates

a theory of participation in elections we analyze a model of participation in elections in which voting is costly and no vote is pivotal ethical agents are motivated to participate when they determine that agents of their type are obligated to do so unlike previous duty based models of participation in our model an ethical agent s obligation to vote is determined endogenously as a function of the behavior of other agents our model predicts high turnout and comparative statics that are consistent with strategic behavior jel d72

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

time delay complexity and support for taxation people often experience the benefits of taxation over time we design an intertemporal market experiment with negative externalities to examine how delaying the benefits of taxation affects support for taxes we find that when negative externalities occur immediately people learn to adopt pigouvian taxes which are aimed at reducing negative externalities and restoring market efficiency by contrast when negative externalities are delayed people are less receptive to taxation this effect persists over time our data reveal that the strong negative delay effect can be explained in large part by narrow bracketing and the increased perceived complexity of the environment rather than by time discounting per se we argue and demonstrate that increasing the transparency of intertemporal tradeoffs can effectively promote support for taxation

ballot position choice fatigue and voter behaviour in this paper we examine the eect of choice fatigue on decision making we exploit a natural experiment in which voters face the same contest at dierent ballot positions due to dierences in the number of local issues on their ballot facing more decisions before a given contest signi cantly increases the tendency to abstain or rely on decision shortcuts such as voting for the status quo or the rst listed candidate we estimate that without choice fatigue abstentions would decrease by 8 and 6 of the propositions in our dataset would have passed rather than failed

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

the economic case for low carbon development in rapidly growing developing world cities a case study of palembang indonesia where costs or risks are higher evidence is lacking or supporting institutions are less developed policymakers can struggle to make the case for low carbon investment this is especially the case in developing world cities where decision makers struggle to keep up with the pace and scale of change focusing on palembang in indonesia this paper considers the economic case for proactive investment in low carbon development we find that a rapidly growing industrial city in a developing country can reduce emissions by 24 1 in 2025 relative to business as usual levels with investments of usd405 6 million that would reduce energy expenditure in the city by usd436 8 million emissions from the regional grid could be reduced by 12 2 in 2025 relative to business as usual trends with investments of usd2 9 billion that would generate annual savings of usd175 million these estimates understate the savings from reduced expenditure on energy subsidies and energy infrastructure the compelling economic case for mainstreaming climate mitigation in this developing country city suggests that the constraints on climate action can be political and institutional rather than economic there is therefore a need for more effective energy governance to drive the transition to a low carbon economy

willpower and the optimal control of visceral urges common intuition and experimental psychology suggest that the ability to self regulate willpower is a depletable resource we investigate the behavior of an agent who optimally consumes a cake or paycheck or workload over time and who recognizes that restraining his consumption too much would exhaust his willpower and leave him unable to manage his consumption unlike prior models of self control a model with willpower depletion can explain the increasing consumption sequences observable in high frequency data and corresponding laboratory findings the apparent links between unrelated self control behaviors and the altered economic behavior following imposition of cognitive loads at the same time willpower depletion provides an alternative explanation for a taste for commitment intertemporal preference reversals and procrastination accounting for willpower depletion thus provides a more unified theory of time preference it also provides an explanation for anomalous intratemporal behaviors such as low correlations between health related activities

backward looking social control rational choice theorists stress the need for social control to overcome the free rider problem in collective action critics counter that mechanisms for monitoring and enforcement are themselves public goods that presume collective action rather than explain it in response heckathorn 1989 proposed an analytic solution based on hypocritical cooperation in which rational actors calculate the optimal allocation of resources between compliance with collective obligations and their enforcement i relax these forward looking behavioral assumptions and show how social control might evolve among backward looking pragmatists computers simulations test the ability of various sanctioning regimes to generate cooperation as well as resist stampedes that risk overcooperation and needless sacrifice external moral sanctions produce too little cooperation while internalized sanctions produce too much

when more seems like less differential price framing increases the choice share of higher priced options four experiments supported by six supplemental studies show that premium but higher priced products e g direct flights larger capacity data storage devices are more popular when the additional

order in product customization decisions evidence from field experiments differentiated product models are predicated on the belief that a product s utility can be derived from the summation of utilities for its individual attributes in one framed field experiment and two natural field experiments we test this assumption by experimentally manipulating the order of attribute presentation in the product customization process of custom made suits and automobiles we find that order affects the design of a suit that people configure and the design and price of a car that people purchase by influencing the likelihood that they will accept the default option suggested by the firm

the downsian model of electoral participation formal theory and empirical analysis of the constituency size effect this paper applies a game theoretic model of participation under uncertainty to investigate the negative relationship between constituency size and voter turnout rates theconstituency size effect we find that this theoretical model accounts for almost all of the variation in turnout due to size in cross sectional data from school budget referenda

financing energy efficiency in developing countries lessons learned and remaining challenges although energy efficiency implementation is increasingly being recognized by policymakers worldwide as one of the most effective means to mitigating rising energy prices tackling potential environmental risks and enhancing energy security mainstreaming its financing in developing country markets continues to be a challenge experience shows that converting cost effective energy savings potential particularly the demand side improvement opportunities across sectors into investments face many barriers and unforeseen transaction costs this paper draws upon selected experiences with financing energy efficiency in developing countries to explore the key factors of various programmatic approaches and financing instruments that have been applied successfully for delivering energy efficiency solutions through case studies a diverse range of institutional issues are examined related to the identification packaging designing and monitoring approaches that have been used to catalyze traditional and innovative financing of energy efficiency projects with adequate liquidity in major developing country markets and availability of modern energy savings technologies it is often the institutional issues that become a key challenge to address in order to finance and implement robust programs as further operational experience is gained increased knowledge sharing can lead to scaling up of such energy efficiency investments the paper concludes with some ideas for accelerating implementation

the moderating role of submarket dynamics on the product customization firm survival relationship in this paper we examine how the provision of product customization services affects firm survival integrating literatures on industry evolution product related adapting services and entry deterrence we hypothesize that the relationship between product customization the costly modification of a product to cater to customer needs and firm survival differs across industries based on the extent of submarkets we argue that in industries that feature submarkets more prominently the positive association between product customization and firm survival is stronger for two conceptually distinct and empirically distinguishable mechanisms customizing firms enter new submarkets and also deter potential entry we conclude that offering product customization services has strategic benefits that sometimes outweigh the cost of coordinating with customers

mental budgeting and consumer decisions consumers often set budgets for categories of expenses e g entertainment and track expenses against their budget because budgets cannot perfectly anticipate consumption opportunities people may earmark too much or too little money for a particular category this leads them to overconsume or underconsume goods in that category the results of three studies suggest that consumers do indeed set budgets and that budgeting may lead to underconsumption to show that consumers track expenses the studies demonstrate that budgeting effects are larger for purchases that are highly typical of their category such purchases reduce the amount people spend in a category and block the purchase of other typical items the studies control for satiation and income effects thus budgeting adds predictive power to standard economic consumer theory

referendum design quorum rules and turnout in this article we focus on the consequences of quorum requirements for turnout in referendums we use a rational choice decision theoretic voting model to demonstrate that participation quorums change the incentives some electors face inducing those who oppose changes in the status quo and expect to be in the minority to abstain as a result paradoxically participation quorums decrease electoral participation we test our model s predictions using data for all referendums held in current european union countries from 1970 until 2007 and show that the existence of a participation quorums increases abstention by more than ten percentage points

toward a theory of affordable loss although dozens of empirical studies have been published on effectuation as a whole much work remains to be done on elaborating each principle in more depth based on an exploratory study of seven ventures from the caribbean island of curacao this paper develops an elaborated process model of the affordable loss heuristic in effectuation the model breaks affordable loss into two components ability and willingness and connects these to the concept of loss aversion from prospect theory furthermore these components are encapsulated in a process involving identity affect and resourcefulness leading to the entry stage entrepreneurial investment decision

learning and forgetting modeling optimal product sampling over time firms use samples to increase the sales of almost all consumable goods including food health and cleaning products despite its importance sampling remains one of the most under researched areas there are no theoretical quantitative models of sampling behavior other than the pioneering work of jain et al 1995 who modeled sampling as an important factor in the diffusion of new products in this paper we characterize sampling as having two effects the first is the change in the probability of a consumer purchasing a product immediately after having sampled the product the second is an increase in the consumer s cumulative goodwill formation which results from sampling the product this distinction differentiates our model from other models of goodwill in which firm sales are only a function of the existing goodwill level we determine the optimal dynamic sampling effort of a firm and examine the factors that affect the sampling decision we find that although the sampling effort will decline over a product s life cycle it may continue in mature products another finding is that when we have a positive change in the factors that increase sampling productivity steady state goodwill stock and sales will increase but equilibrium sampling can either increase or decrease the change in the sampling level is indeterminate because while increased sampling productivity means that firms have incentives to increase sampling the increase in the equilibrium goodwill level indirectly reduces the marginal productivity of sampling thus reducing the incentives to sample we discuss managerial implications and how the model can be used to address various circumstances

learning to cooperate stochastic and tacit collusion in social exchange the prisoner s dilemma formalizes the social trap that arises when individually rational choices aggregate with mutually undesirable consequences the game theoretic solution centers on the opportunity for tacit collusion in repeated play however not all actors grasp the strategic implications of future interaction accordingly this study reformulates the game as a stochastic learning model in which the behavior of interdependent actors is constinually shaped by sanctions and cues generated by their interaction computer simulations of a two person game show that adaptive actors are led into a social trap more readily than are fully rational actors but they are also better at finding their way out prosocial norms appear to be a consequence rather than cause of cooperation but useful in promoting forgiveness of random deviance the model is then elaborated as an n way prisoner s dilemma simulations show how the effects of network size density mobility and anonymity derive from a fundamental princi

consumer preferences and willingness to pay for compact fluorescent lighting policy implications for energy efficiency promotion in saint lucia this article examines consumer willingness to pay for energy saving compact fluorescent light bulbs using the results of a stated preferences study conducted in the caribbean island nation of saint lucia geographic location low income status and age are found to affect willingness to pay for compact fluorescent lighting while higher income status and other demographic variables appear to have minimal or no significant impacts energy efficiency knowledge is associated with increased willingness to pay for energy efficient bulbs and with increased use of compact fluorescent lighting contrary to theoretical expectations past purchase of compact fluorescent bulbs is found to have no impact on self reported willingness to pay we hypothesize that this null result is due to the recent emergence of low cost low quality compact fluorescent bulbs in the saint lucian lighting market which may be negatively influencing consumers preferences and expectations regarding energy efficient lighting findings support the argument that government sponsored education and subsidy programs will likely result in increased use of energy saving technologies in saint lucia but such behavioral changes may not be sustained in the long run unless low quality bulbs the lemons of the compact fluorescent lighting market can be clearly identified by consumers

the behavioral life cycle hypothesis self control mental accounting and framing are incorporated in a behavioral enrichment of the life cycle theory of saving called the behavioral life cycle blc hypothesis the key assumption of the blc theory is that households treat components of their wealth as nonfungible even in the absence of credit rationing specifically wealth is assumed to be divided into three mental accounts current income current assets and future income the temptation to spend is assumed to be greatest for current income and least for future income considerable empirical support for the blc theory is presented primarily drawn from published econometric studies

melioration a theory of distributed choice in this paper we develop a theory of individual choice called melioration which implies that choices distributed over a period of time may be reliably and predictably suboptimal in terms of the person s own preferences consider some typical examples of distributed choices the expenditure rate on various non durables frequency of athletic exercise rate of work in free lance type occupations allocation of leisure time rate of savings or dissavings expenditures on lottery tickets and other forms of gambling when people express dissatisfaction about their choices their discontent seems clustered around these sorts of distributed choices for example complaints that one is working too hard or not hard enough exercising too little or too much wasting time overeating overspending and so on are commonplace the next two sections of the paper spell out the basic theory we are proposing the following section then applies the theory to pathological consumption patterns and shows that one should find a general underinvestment in those activities that exhibit increasing average returns to rate of consumption and an overinvestment in activities that have an addiction like interaction between value and rate the final section compares the theory with other approaches to suboptimal choice

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

costly information acquisition experimental analysis of a boundedly rational model the directed cognition model assumes that agents use partially myopic option value calculations to select their next cognitive operation the current paper tests this model by studying information acquisition in two experiments in the first experiment information acquisition has an explicit financial cost in the second experiment information acquisition is costly because time is scarce the directed cognition model successfully predicts aggregate information acquisition patterns in these experiments when the directed cognition model and the fully rational model make demonstrably different predictions the directed cognition model better matches the laboratory evidence jel d83

a passion for voting we model expressive voting as a dynamic game with informed and ignorant voters a voter has selective memory for actions and he is aware of it we find a unique symmetric equilibrium with ignorant voting public signal in favor of one particular alternative creates the bandwagon and underdog effects when the signal is sufficiently strong the majority outcome is biased this is a possible reason for persistence of public policies

self control for the righteous toward a theory of precommitment to indulgence prior research has examined consumers use of self control to avoid hedonic myopic temptations such as overspending and smoking in this research we investigate the opposite form of self control whereby consumers force themselves to indulge and avoid default forms of spending on utilitarian necessities and or savings in particular consumers who have difficulty choosing items that are perceived as indulgences or luxuries e g a cruise over necessities e g saving for college education and cash in everyday decisions may use precommitments to indulgence especially when the psychological cost of such commitments is less concrete these propositions were tested in a series of studies involving real and hypothetical choices as well as process measures the results indicate that a substantial segment of consumers choose hedonic luxury rewards over cash of equal or greater value consumers typically explain such choices based on the need to precommit to indulgence to make sure that the award does no

addressing the renewable energy financing gap in africa to promote universal energy access integrated renewable energy financing in malawi abstract the sustainable energy for all initiative is a global initiative launched by the united nations secretary general in 2012 with a goal of providing universal access to modern energy services by 2030 to achieve this goal substantial financial and technological investments will be required at a rate far exceeding historical levels sub saharan africa has a 30 5 electrification rate and policy reform issues to improve electrification have been poorly implemented thereby sprinkling doubt as to whether the region would be able to achieve 100 access to electricity for all by the year 2030 sub saharan africa faces a tough challenge in order to achieve universal access to modern energy services since the region fails to attract energy sector investments there is also a general perception that the region contributes very little to global greenhouse gas emissions hence offers few opportunities to reduce these emissions consequently missing out on attracting climate finance projects a guarantee of power purchase has been shown to attract energy sector investments however guarantees of power purchases such as feed in tariffs are experiencing slow market growth in developing countries because of a range of technical regulatory and financial barriers using malawi as a case study of a developing country this review provides a perspective from a sub saharan africa least developed country as to the various electrification renewable energy deployment and climate change management challenges that still require urgent attention this study shows that despite the perceived regulatory and financial challenges malawi can integrate and use a combination of adapted price guarantee schemes cross subsidies and environmental taxes in order to support initiatives aimed at supporting the country s development of renewable energy sources and hence indirectly support the sustainable energy for all initiative

voter participation and strategic uncertainty the paradox of not voting is examined in a model where voters have uncertainty about the preferences and costs of other voters in game theoretic models of voter participation under complete information equilibrium outcomes can have substantial turnout even when voting costs are relatively high in contrast when uncertainty about preferences and costs is present only voters with negligible or negative net voting costs participate when the electorate is large

design of incentive programs for accelerating penetration of energy efficient appliances abstract incentives are policy tools that sway purchase retail stocking and production decisions toward energy efficient products incentives complement mandatory standards and labeling policies by accelerating market penetration of products that are more energy efficient than required by existing standards and by preparing the market for more stringent future mandatory requirements incentives can be directed at different points in the appliance s supply chain one point may be more effective than another depending on the technology s maturity and market penetration this paper seeks to inform future policy and program design by categorizing the main elements of incentive programs from around the world we identify advantages and disadvantages of program designs through a qualitative overview of incentive programs worldwide we find that financial incentive programs have greater impact when they target highly efficient technologies with a small market share and that program designs depend on the market barriers addressed the target equipment and the local market context no program design is inherently superior to another the key to successful program design and implementation is a thorough understanding of the market and identification of the most important local obstacles to the penetration of energy efficient technologies

preference dynamics in sequential consumer choice with defaults this research examines the impact of defaults on product choice in sequential decision settings whereas prior research has shown that a default can affect what consumers purchase by promoting choi

the effect of escos on carbon dioxide emissions proponents of energy service companies escos argue that these firms provide a crucial instrument for delivering improved energy efficiency in public and private sectors thus contributing to carbon dioxide co2 emission reduction around the world do escos reduce co2 emissions to answer this question we develop an estimating equation which approximates the ipat model from a simple model of production we estimate a dynamic panel of 129 countries over the period 1980 2007 to show that the escos effectively reduce co2 emissions and that this effect increases over time these findings also prove robust to the inclusion of a set of control variables different dates of the first esco and the kyoto protocol finally we discuss energy policy implications

decision fatigue and heuristic analyst forecasts abstract psychological evidence indicates that decision quality declines after an extensive session of decision making a phenomenon known as decision fatigue we study whether decision fatigue affects analysts judgments analysts cover multiple firms and often issue several forecasts in a single day we find that forecast accuracy declines over the course of a day as the number of forecasts the analyst has already issued increases also consistent with decision fatigue we find that the more forecasts an analyst issues the higher the likelihood the analyst resorts to more heuristic decisions by herding more closely with the consensus forecast self herding i e reissuing their own previous outstanding forecasts and issuing a rounded forecast finally we find that the stock market understands these effects and discounts for analyst decision fatigue

local implementation for green manufacturing technology diffusion policy in china from the user firms perspectives abstract in recent years china has started to change its growth strategy to a more sustainable model in response to the limits to growth dilemma specifically the national policy advocates to promote the use of green manufacturing technologies through demonstration projects and to incentivize chinese manufacturers to adopt these green technologies that are also encouraged by local governments these green technologies can increase the economic gains of manufacturers by reducing costs on energy consumption and shift away from selling low margin products however the local authorities often encounter obstacles when implementing policies for promoting these technologies among manufacturing firms this paper explores the factors that affect the decision making of user firms throughout the policy implementation process based on the econometric analysis of the survey for china s electric motors upgrading project in guangdong province this study shows that three key factors are helpful in the local government s effort to implement the national project i e manufacturers awareness the understanding of the energy efficiency technology and the long term macroeconomic benefits in addition encouraging the participation of financial institutions is especially useful for local governments to convince small and medium sized firms these findings are beneficial for local implementation of green manufacturing technology diffusion policies in china and have worldwide policy implication as well

a model of focusing in economic choice we present a generally applicable theory of focusing based on the hypothesis that a person focuses more on and hence overweights attributes in which her options dier more our model predicts that the decisionmaker is too prone to choose options with concentrated advantages relative to alternatives but maximizes utility when the advantages and disadvantages of alternatives are equally concentrated in intertemporal choice because the relative concentrations of an option s costs and benets can be dierent from the perspective of a single period and the perspective of the entire choice problem the decisionmaker often exhibits a form of time inconsistency she is present biased when the costs of current misbehavior are distributed over many future dates such as in harmful consumption but future biased when the benet of many

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

good nudge lullaby choice architecture and default bias reinforcement because people disproportionally follow defaults both libertarian paternalists and marketers try to present options they want to promote as the default however setting certain defaults and thereby influencing current decisions may also affect choices in later similar decisions in this paper we explore experimentally whether the default bias can be reinforced by providing good defaults we show that people who faced better defaults in the past are more likely to follow defaults than people who faced random defaults hurting their later performance this malleability of the default bias explains certain marketing practices and serves as an insight for libertarian paternalists this article is protected by copyright all rights reserved

a referendum on trade theory voting on free trade in costa rica research on mass opinion in international political economy overwhelmingly relies on survey data this poses problems of external validity especially for a frequently low salience issue such as trade policy to examine whether survey findings about attitudes toward economic openness apply outside of surveys this note considers patterns of voting in the 2007 costa rican plebiscite about joining the central american free trade area several extant theories appear to explain voting patterns but the results are less in line with traditional economic models based on locally important economic sectors

a rational reconstruction of the compromise effect using market data to infer utilities this article explores the possibility that consumers use market data to make inferences about product utilities the argument is made by means of an example based on the compromise effect found in extant experimental data this phenomenon is generally looked at as a manifestation of deviations from rationality in choice however assuming full rationality i describe a decision rule that is based on consumers inferences about their personal valuation of alternatives from the portfolio of market offerings and some information about their own relative tastes through a number of examples i will argue that consumers often use this or similar decision rules to make inferences about utility i then show that the decision rule may generate compromise effects in experiments and that it may be sustainable the compromise effect could therefore be seen as preliminary evidence that consumers make such inferences

the red and the black mental accounting of savings and debt in the standard economic account of consumer behavior the cost of a purchase takes the form of a reduction in future utility when expenditures that otherwise could have been made are forgone the reality of consumer hedonics is different when people make purchases they often experience an immediate pain of paying which can undermine the pleasure derived from consumption the ticking of the taxi meter for example reduces one s pleasure from the ride we propose a double entry mental accounting theory that describes the nature of these reciprocal interactions between the pleasure of consumption and the pain of paying and draws out their implications for consumer behavior and hedonics a central assumption of the model which we call prospective accounting is that consumption that has already been paid for can be enjoyed as if it were free and that the pain associated with payments made prior to consumption but not after is buffered by thoughts of the benefits that the payments will finance another important concept is coupling which refers to the degree to which consumption calls to mind thoughts of payment and vice versa some financing methods such as credit cards tend to weaken coupling whereas others such as cash payment produce tight coupling our model makes a variety of predictions that are at variance with economic formulations contrary to the standard prediction that people will finance purchases to minimize the present value of payments our model predicts strong debt aversion that they should prefer to prepay for consumption or to get paid for work after it is performed such pay before sequences confer hedonic benefits because consumption can be enjoyed without thinking about the need to pay for it in the future likewise when paying beforehand the pain of paying is mitigated by thoughts of future consumption benefits contrary to the economic prediction that consumers should prefer to pay at the margin for what they consume our model predicts that consumers will find it less painful to pay for and hence will prefer flat rate pricing schemes such as unlimited internet access at a fixed monthly price even if it involves paying more for the same usage other predictions concern spending patterns with cash charge or credit cards and preferences for the earmarking of purchases we test these predictions in a series of surveys and in a conjoint like analysis that pitted our double entry mental accounting model against a standard discounting formulation and another benchmark that did not incorporate hedonic interactions between consumption and payments our model provides a better fit of the data for 60 of the subjects the discounting formulation provides a better fit for only 29 of the subjects even when allowing for positive and negative discount rates the pain of paying we argue plays an important role in consumer self regulation but is hedonically costly from a hedonic perspective the ideal situation is one in which payments are tightly coupled to consumption so that paying evokes thoughts about the benefits being financed but consumption is decoupled from payments so that consumption does not evoke thoughts about payment from an efficiency perspective however it is important for consumers to be aware of what they are paying for consumption this creates a tension between hedonic efficiency and what we call decision efficiency various institutional arrangements such as financing of public parks through taxes or usage fees play into this tradeoff a producer developing a pricing structure for their product or service should be aware of these two conflicting objectives and should try to devise a structure that reconciles them

overconfidence in political behavior this paper studies theoretically and empirically the role of overconfidence in political behavior our model of overconfidence in beliefs predicts that overconfidence leads to ideological extremeness increased voter turnout and stronger partisan identification the model also makes nuanced predictions about the patterns of ideology in society these predictions are tested using unique data that measure the overconfidence and standard political characteristics of a nationwide sample of over 3 000 adults our numerous predictions find strong support in these data in particular we document that overconfidence is a substantively and statistically important predictor of ideological extremeness voter turnout and partisan identification jel c83 d03 d72 d83

do customers learn from experience evidence from retail banking we study customers adoption and subsequent switching decisions with regard to a menu of three part tariff plans offered by a commercial bank using a rich panel data set covering 70 510 fee based checking accounts over 30 months before and after the introduction of the plans we find that most customers adopt non cost minimizing plans preferring plans with large monthly allowances and high fixed payments furthermore after adoption customers who exceed their allowances and consequently pay overage fees are more likely to switch to plans with larger allowances than customers who do not experience such fees notably after switching these overage paying customers pay higher monthly payments than before in contrast switching customers who did not pay overage payments before switching pay less after switching our findings unlike those of previous research on experience based learning suggest that the behavior of experienced customers does not converge to the predictions of neoclassical models we p

when should the ask be a nudge the effect of default amounts on charitable donations abstracthow does setting a donation option as the default in a charitable appeal affect people s decisions in eight studies comprising 11 508 participants making 2 423 donation decisions in both experimental settings and a large scale natural field experiment the authors investigate the effect of choice option defaults on the donation rate average donation amount and the resulting revenue they find 1 a scale back effect in which low defaults reduce average donation amounts 2 a lower bar effect in which defaulting a low amount increases donation rate and 3 a default distraction effect in which introducing any defaults reduces the effect of other cues such as positive charity information contrary to the view that setting defaults will backfire defaults increased revenue in the field study however the findings suggest that defaults can sometimes be a self canceling intervention with countervailing effects of default option magnitude on decisions and resulting in no net effect

credit cards as spending facilitating stimuli a conditioning interpretation four experiments and one study were conducted to test the hypothesis that stimuli associated with spending can elicit spending responses in all experiments credit card stimuli were either present or absent in situations in which subjects were given an opportunity to spend credit card stimuli directed spending such that the probability speed or magnitude of spending was enhanced in the presence of credit card cues a conditioning explanation was used to interpret the results

defaults and donations evidence from a field experiment we study the effects of defaults on charitable giving in a large scale field experiment on an online fundraising platform we exogenously vary default options along two choice dimensions the chari

anticipation and the valuation of delayed consumption this paper presents a model of intertemporal choice that incorporates savoring and dread i e utility from anticipat ion of delayed consumption the model explains why an individual with positive time preference may delay desirable outcomes or get unpleas ant outcomes over with quickly contrary to the prediction of convent ional formulations of intertemporal choice implications of savoring and dread for savings behavior empirical estimation of discount rate s and public policy efforts to combat myopic behavior are explored the model provides an explanation for common violations of the indepe ndence axiom as applied to intertemporal choice copyright 1987 by royal economic society

the failure of competition in the credit card market the bank credit card market containing 4 000 firms and lacking regulatory barriers casually appears to be a hospitable environment for the model of perfect competition nevertheless this article reports that credit card interest rates have been exceptionally sticky relative to the cost of funds moreover major credit card issuers have persistently earned from three to five times the ordinary rate of return in banking during the periods 1983 88 the failure of the competitive model appears to be partly attributable to consumers making credit card choices without taking account of the very high probability that they will pay interest on their outstanding balances copyright 1991 by american economic association

a behavioral model of turnout the so called paradox of voting is a major anomaly for rational choice theories of elections if voting is costly and citizens are rational then in large electrorates the expected turnout would be small for if many people voted the chance of anyone being pivotal would be too small to make the act worthwhile yet many people do vote even in large national elections to address this puzzle we construct a model of adaptive rationality citizens learn by simple trial and error repeating satisfactory actions and avoiding unsatisfactory ones their aspiration levels which code current payoffs as satisfactory or unsatisfactory are also endogenous themselves adjusting to experience our main result is that agents who adapt in this manner turn out in substantial numbers even in large electorates and even if voting is costly for everyone standard conceptions of rational behavior do not explain why anyone bothers to vote in a mass election turnout is the paradox that ate rational choice theory fiorina 1990 334 we would like to thank stephen ansolabehere sorin antohi glenn ellison dedre gentner sunil kumar david laitin tze lai arthur lupia elijah millgram lincoln moses scott page tom palfrey john patty paul pfleiderer adam simon joel sobel carole uhlaner three anonymous referees and the participants in the political economics seminar at the gsb the stanford caltech workshop the unc american politics research group the ucla conference on cognition emotion and rational choice panels at the annual meetings of the mpsa and the apsa the agent 2000 workshop the seventh annual wallis conference the cmu pitt colloquium series and the center for advanced study in the behavioral sciences seminar series for their helpful comments this paper was written while ting was at the university of north carolina at chapel hill and he thanks unc s department of political science for its support it was revised while bendor was a fellow at the casbs and he is grateful for the center s financial and intellectual support

an evolutionary analysis of turnout with conformist citizens abstract we propose an evolutionary analysis of a voting game where citizens have a preference for conformism that adds to the instrumental preference for the electoral outcome multiple equilibria arise and some generate high turnout simulations of best response dynamics show that high turnout is asymptotically stable if conformism matters but its likelihood depends on the reference group for conformism high turnout is more likely when voters care about their own group s choice as this better overrides the free rider problem of voting games comparative statics on the voting cost distribution and the groups composition are also done

groups in rational turnout models a model of the strategic calculus of voting that incorporates the behavior of groups is presented if candidates choose different positions positive turnout is possible in partial equilibrium and is generally larger than that without group rationality nevertheless if candidates are probability maximizers and a unique general equilibrium exists the candidates will choose equivalent positions and turnout will be zero even with group rationality but if candidates care about both policy and winning they will choose different positions and cause positive turnout this turnout will be larger than that that would occur without group rationality group rationality alone cannot explain positive turnout in a general equilibrium theory of elections it does imply larger turnout in conjunction with policy oriented candidates than would be predicted solely by individualistic rational behavior

follow the leader theory and evidence on political participation using state by state voting data for u s presidential elections the authors observe that voter turnout is a positive function of predicted closeness to explain the strategic component of political participation they develop a follow the leader model political leaders expend effort according to their chance of being pivotal which depends on the expected closeness of the race at both state and national levels and how voters respond to their effort structural estimation supports this model for example a 1 percent increase in the predicted closeness at the state level stimulates leaders efforts which increases turnout by 0 34 percent

when does one bad apple spoil the barrel an evolutionary analysis of collective action this paper studies collective action games in which the production of a public good requires teamwork a leading example is a threshold game in which provision requires the voluntary participation of m out of n players quantal response strategy revisions allow play to move between equilibria in which a team successfully provides and an equilibrium in which the collective action fails a full characterization of long run play reveals the determinants of success these include the correlation between players costs of provision and their valuations for the good the addition of an extra bad apple player can spoil the barrel by destabilizing successful teams and so offers a rationale for limiting the pool of possible contributors copyright 2008 wiley blackwell

coherent arbitrariness stable demand curves without stable preferences economic theories of valuation generally assume that prices of commodities and assets are derived from underlying fundamental values for example in finance theory asset prices are believed to reflect the market estimate of the discounted present value of the asset s payoff stream in labor theory the supply of labor is established by the tradeoff between the desire for consumption and the displeasure of work finally and most importantly for this chapter consumer microeconomics assumes that the demand curves for consumer products chocolates cds movies vacations drugs and so forth can be ultimately traced to the valuation of pleasures that consumers anticipate receiving from these products because it is difficult as a rule to measure fundamental values directly empirical tests of economic theory typically examine whether the effects of changes in circumstances on valuations are consistent with theoretical prediction for example whether labor supply responds appropriately to a change in the wage rate whether compensated demand curves for commodities are downward sloping or whether stock prices respond in the predicted way to share repurchases however such comparative static relationships are a necessary but not sufficient condition for fundamental valuation e g summers 1986 becker 1962 was perhaps the first to make this point explicitly when he observed that consumers choosing commodity bundles randomly from their budget set would nevertheless produce downward sloping demand curves

the effect of a delay between choice and consumption on consumption enjoyment a consumer choosing a product must often wait before consuming it in this article we consider the consequences of waiting on consumption enjoyment we propose that the effect of a delay on consumption enjoyment depends on both the negative utility of the wait itself and on the positive utility of anticipating a pleasant consumption experience these factors exert different degrees of influence depending on characteristics of the decision task the results of three studies suggest that a delay increases consumption enjoyment for pleasurable products when actual consumption occurs but decreases enjoyment for imagined consumption furthermore the vividness of the awaited product moderates these effects

hedonic prices and implicit markets estimating demand and supply functions for differentiated products in choosing the level of quality to purchase the buyer of a differentiated product also chooses a point on the marginal price schedule for that product hence in general the demand functions for product characteristics cannot be consistently estimated by ordinary least squares market equilibrium results in a matching of characteristics of demanders and suppliers this matching restricts the use of buyer and seller characteristics as instruments when estimating demand and supply functions for product characteristics the paper develops these issues a stochastic structure for hedonic equilibrium models is then proposed identification results are presented and estimation procedures are outlined

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