psychological distance and the dual role of price when evaluating a product consumers may interpret price information as either an indicator of quality or an indicator of monetary sacrifice on the basis of construal level theory we propose that psychological distance alters the weight consumers attach to these opposing roles of price four experiments show 1 that from both a temporally and a socially distant perspective the price perceived quality relationship is more pronounced 2 that from a temporally proximal perspective the price perceived sacrifice relationship is more pronounced 3 that these effects stem from differences in the way consumers mentally construe price information and 4 that when people initially use price to judge a product for distant future consumption it receives less attention as an indicator of sacrifice in a later evaluation for near future consumption these findings have implications for prelaunch communication activities and preference elicitation methods such as conjoint analysis

explaining the border effect the role of exchange rate variability shipping costs and geography this paper exploits a three dimensional panel data set of prices on 27 traded goods over 88 quarters across 96 cities in the us and japan we show that a simple average of good level real exchange rates tracks the nominal exchange rate well suggesting strong evidence of sticky prices focusing on dispersion in prices between city pairs we find that crossing the us japan border is equivalent to adding as much as 43 000 trillion miles to the cross country volatility of relative prices we turn next to economic explanations for this so called border effect and to its dynamics distance unit shipping costs and exchange rate variability collectively explain a substantial portion of the observed international market segmentation relative wage variability on the other hand has little independent impact on segmentation 2001 elsevier science b v all rights reserved

a reexamination of frequency depth effects in consumer price judgments previous research has shown that when there are multiple possible prices for two brands the brand that is discounted frequently but at shallow levels is perceived to have a lower average price than the brand that is discounted infrequently but at deeper levels the frequency effect however when there are only two possible prices for each brand the brand discounted infrequently but at deeper levels is perceived to have a lower average price the depth effect over a series of experiments we demonstrate that these frequency and depth effects do not generalize to other temporal price distributions

licensing effect in consumer choice abstract most choices in the real world follow other choices or judgments the authors show that a prior choice which activates and boosts a positive self concept subsequently licenses the choice of a more self indulgent option the authors propose that licensing can operate by committing to a virtuous act in a preceding choice which reduces negative self attributions associated with the purchase of relative luxuries five studies demonstrate the proposed licensing effect of a prior commitment to a virtuous act on subsequent choice consistent with the authors theory the preference for an indulgent option diminishes if the licensing task is attributed to an external motivation the authors also report a mediation analysis in support of their theoretical explanation that the licensing effect operates by providing a temporary boost in the relevant self concept

the quality of price as a quality cue as i discuss in this commentary these findings are noteworthy for three reasons first they are novel because extant perspectives on how price quality relationships operate do not envision the process that sca posit second they are provocative because consistent with the opening quote attributed to einstein the findings suggest that perceptions can occasionally influence reality third the findings are potentially controversial because they raise the specter of hidden persuaders that operate in a stealthy and manipulative fashion to prey on consumers psychological vulnerabilities packard 1957 but first some contextual background is necessary

anticipation of future variety reduces satiation from current experiences abstractsatiation frequently occurs from repeated consumption of the same items over time however results from five experiments show that when people anticipate consuming something different in the future they satiate at a slower rate in the present the authors find the effect in both food and nonfood consumption settings using different approaches to measure satiation this effect is cognitive specifically anticipating variety in future consumption generates positive thoughts about that future experience the authors find two boundary conditions the future consumption outcome must be 1 in a related product category and 2 at least as attractive as the present consumption outcome the authors rule out potential alternative explanations such as mere exposure to variety the possibility that the future experience is more attractive rather than just different than the current one and perceptions of scarcity associated with the item consumed in the present

do employee spinoffs learn markets from their parents evidence from international trade abstract it is well established that employee spinoffs learn their parents technologies but little is known about their demand side learning we exploit the identification in international trade data of parent markets countries to investigate whether exporting employee spinoffs of exporting parents have an advantage in accessing their parents markets over exporting comparison firms well positioned to learn those markets at arm s length we find that controlling for the greater overlap of spinoffs with their parents export products at entry spinoffs access 51 percent more parent markets than exporting firms in the same 4 digit industries and municipalities as the parents this advantage shrinks monotonically with time becoming statistically insignificant four years after entry indicating that intrafirm learning provides spinoffs with a four year head start over learning at arm s length spinoffs do not overlap more than comparison firms with parent markets that the parents did not serve at spinoff entry providing evidence against the alternative hypothesis that product overlap inadequately controls for greater technological similarity of spinoffs to parents firm entry into parent markets predicted by spinoff status does not lead to entry into adjacent markets the following year

framing the deal the role of restrictions in accentuating deal value we propose that consumers use the presence of a restriction i e purchase limit purchase precondition or time limit as a source of information to evaluate a deal in a series of four studies we present evidence suggesting that restrictions serve to accentuate deal value and act as promoters of promotions we begin by using aggregate level scanner data to test our hypothesis that a sales restriction e g limit x per customer results in higher sales via three subsequent experiments we then investigate contextual and individual factors moderating this effect study 2 suggests that restrictions only have a positive effect for low need for cognition individuals study 3 explores the potential mediating role of deal evaluations on purchase intent across discount levels study 4 examines the effect of three types of restrictions purchase limits time limits and purchase preconditions across discount levels and explores the underlying beliefs driving these effects an integrative model across studies demonstrates the robustness of the restriction effect and supports the premise that restrictions work through signaling value implications for how consumers determine promotional value are discussed

competitive price and quality under asymmetric information we present an analysis of equilibrium in markets with asymmetrically informed consumers some consumers know both price and quality of all sellers whereas others know neither but may search among sellers the equilibrium correlation between price and quality generally increases with the level of information in the market and can be negative when this level is sufficiently small a meta analysis of the available empirical studies strongly supports the model s predictions

high and declining prices signal product quality high and declining prices signal a high quality product high prices are the efficient means of signaling because the consequent loss of sales volume is most damaging for lower cost lower quality products as time passes and the number of informed consumers increases the signaling distortion lessens resulting in a declining price profile the prediction of high and declining prices is robust across a variety of dynamic models and is consistent with recent empirical findings copyright 1991 by american economic association

in search of optimised regional trade agreements and applications to east asia we quantitatively analyse the trade effects of enhanced trade facilitation with extended gravity equations our findings confirm that rtas comprised of countries equipped with better trade facilitation are more likely to be trade creating less likely to be trade diverting and are thus more likely to lead the world economy toward global free trade we also find that i the traditional gains from shallow integration through eliminating tariff barriers will be greater for south south rtas in east asia such as an asean china rta provided that the tariff reducing schedule is strictly fulfilled ii the gains from deeper integration through enhancing trade facilitation will be greater for north north rtas in east asia such as a japan korea rta and iii the gains from a combined trade liberalisation strategy through tariff reductions and enhanced trade facilitation will be greater for north south rtas in east asia such as a china korea and an asean 3 rta

the structure of worker compensation in brazil with a comparison to france and the united states abstract we employ comprehensive linked employer employee data for brazil to analyze wage determinants and compare results to abowd et al 2001 for french and u s manufacturing while returns to human capital in brazilian manufacturing exceed those of the other countries occupation and gender differentials are similar the worker characteristics component accounts for much of the greater wage inequality in brazil but the establishment fixed component has scant explanatory power thus firm or industry level factors offer little scope for explaining the differences in wage inequality brazil s wage structure resembles that of france a country with some similarity in labor market institutions

information asymmetry valuation and the corporate spin off decision we empirically analyze the information hypothesis that the separation of a rm s divisions into independently traded units through a spin o enhances value because it mitigates information asymmetry about the rm consistent with this hypothesis we nd that rms that engage in spin o s have higher levels of information asymmetry compared to their industry and size matched counterparts and the information problems decrease signi cantly after the spin o the gains around spin o s are positively related to the degree of information asymmetry and this relation is more pronounced for rms with fewer negative synergies between divisions finally rms with higher growth opportunities and rms in need of external capital show a higher propensity to engage in spin o s they also raise more capital following a spin o which is consistent with the view that

the border effect in spain this paper analyses the border effect in spain using a unique dataset on intranational trade flows over the period 1995 98 the results indicate that after controlling for market size and distance spanish regions trade around 22 times more with the rest of spain than they do with oecd countries moreover the size of the spanish bias is lower in the case of the spanish regions exports than in the case of imports although the difference is not statistically significant in most cases finally the border effect is not uniform across spanish regions

the origin of spin offs a typology of corporate and academic spin offs we provide a typology of corporate and academic spin off types distinguishing spin offs involving new ventures from those that concern existing activities we summarize the papers published in this special issue relating them to the typology we develop we conclude by developing an agenda for further research on spin offs

employee spinoffs and other entrants stylized facts from brazil using a comprehensive linked employer employee database from brazil for the period 1995 2001 we are able for the first time to compare firms founded as employee spinoffs to new firms without parents and to diversification ventures of existing firms entering a new industry employee spinoffs are defined either as the director manager having moved from a parent in the same industry or as one quarter of the employees having shifted from a common parent depending on definition employee spinoffs account for between one sixth and one third of the new firms in brazil s private sector during this period regardless of definition size at entry is larger for employee spinoffs than for new firms without parents but smaller than for diversification ventures of existing firms similarly exit rates for employee spinoffs are less than for new firms without parents and comparable to those for diversification ventures of existing firms these results suggest that we can think of some part of a firm s productivity draw in the jovanovic 1982 model as embodied in the firm s employees and portable by them to a new firm

firm spin offs in denmark 1981 2000 patterns of entry and exit abstract this paper adds large sample evidence on the extent to which the likelihood of business failure or success is related to relationships between parent firms and their off spring for this purpose we make use of an exhaustive matched employer employee data set covering the entire danish private sector in years 1981 to 2000 to study firm entry and exit special focus is on spin offs a particular group of small entrants which are founded by groups of persons originating from the same former workplace we estimate a multinomial logit model in order to examine which characteristics of the founders and the parent firms increase the probability of spinning off next we carry out a duration analysis of the subsequent transitions of the spin offs and compare their exit risks with those of other entrant firms which have less strong parent progeny relationships in terms of worker flows

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

does a dollar get you a dollar s worth of merchandise the impact of power distance belief on price quality judgments the role of cultural factors in influencing price perceptions is not understood well in the literature the present research seeks to fill this gap by examining the link between power distance belief the acceptance and endorsement of power disparities in society and the tendency to use the price of a product to judge its quality the underlying processes and boundary conditions three studies show that consumers high vs low in power distance belief have a greater tendency to use price to judge quality because they have a greater need for structure which makes them more likely to discriminate between brands and rank them based on price the relationships held regardless of whether the price to quality relation was assessed using a standard self report scale or via actual product judgments and whether power distance belief was measured or manipulated the effect was found to be independent of self construal holistic thinking and risk aversion was mediated by a need for structure and disappeared when the tendency to order was facilitated impeded by making price more less salient theoretical implications are discussed

if you tourist behave irrationally i ll find you abstract when departures from rational behavior can potentially be expected modeling should allow for their identification and their quantification in this regard prices in tourism might have effects that may not be as apparent as economic theory predicts this article incorporates the sticker shock formulation into the mixed logit model without imposing consistency with consumer theory to accommodate any possible positive or negative price effects by allowing the parameters of price and sticker shock term to take any value negative or positive we detect abnormal behaviors in the tourist demand not only is the negative relationship between price and demand inverted for some people but also some tourists might be willing to accept higher than expected prices the non well behaved groups shares are estimated

assessing the benefits of trade facilitation a global perspective this paper estimates the relationship between trade facilitation and trade flows using a panel of disaggregated manufactured goods for the 2000 2001 period for 75 countries four categories of trade facilitation are defined measured and assessed for their impact on bilateral trade flows using a gravity model the four measures of trade facilitation are port infrastructure air and maritime customs environment regulatory environments and e business infrastructure the results suggest that raising global capacity halfway to the world average in the four areas would increase trade by 377 billion most regions of the world increase exports more than imports in large part this result stems from increased exports to oecd markets that is obtained through a country s own effort to improve ports customs regulations and services infrastructures in addition the results suggest that reform and capacity building in trade facilitation in areas related to gatt articles v viii and x that are under discussion at the world trade organisation could expand trade and exports significantly many of the reform measures necessary to achieve this goal need not necessarily require large scale investment projects but rather action in legal and administrative reform to facilitate trade

flying under the radar perverse package size effects on consumption self regulation consumers believe that small package formats of hedonic but not of utilitarian products help to regulate consumption especially when their self regulatory concerns are activated these beliefs may backfire and increase consumption of hedonic products specifically activating self regulatory concerns had no consumption effects when tempting products came in small package formats yet when tempting products came in large package formats consumers deliberated most before consumption were least likely to consume and consumed the least this illustrates how small temptations can remain undetected flying under the radar and large package formats may reduce consumption as a result of the experienced self control conflict

longitudinal firm level data problems and solutions empirical measures of firm and employment dynamics based on administrative datasets are biased due to missing links in the longitudinal observation of firms this paper presents a systematic overview of the problems and evaluates two prevailing solutions we quantify the biases in a set of widely used empirical measures and show which estimates are most sensitive to missing linkages the biases are found to be especially large in the size distribution of entrants and exits in firm level growth estimates for medium and large firms and in job reallocation measures we show that an employee flow linkage method is more effective in reducing bias than a traditional link method often used by statistical agencies a consistent approach is developed for imputing firm level growth measures of linked firms the analysis is carried out using a longitudinal dataset for belgium and discussed from an international perspective

a theory of corporate spin offs abstract we develop a new rationale for corporate spin offs and for the performance and value improvements following them based on corporate control considerations we consider a firm with multiple divisions with incumbent management having different abilities for managing these divisions if the incumbent loses control to a more able rival it benefits all shareholders including the incumbent by increasing equity value but involves the incumbent losing his private benefits of control we show that a spin off increases the incumbent s chance of losing control to such a rival this in turn motivates the incumbent either to work harder at managing the firm in order to avoid any loss of control or to relinquish control of one of the firms resulting from the spin off either immediately following the spin off or subsequently in a control contest we show that spin offs will be associated with positive announcement effects and increases in long term operating performance further certain categories of spin offs will exhibit long term positive abnormal stock returns

scarcity polarizes preferences the impact on choice among multiple items in a product class this research examines how the salience of scarcity influences choices of individual items from a product class the authors propose that overall perception of scarcity versus overall perception of abundance increases choice share of the most preferred item from a product class they argue that this phenomenon occurs because scarcity induces arousal and the heightened arousal polarizes the evaluations of individual items contained in the choice set the results from five experiments show that scarcity versus abundance broadens the discrepancy between the liking of the favorite and nonfavorite items and leads to a greater choice share of the favorite item the findings provide support for the arousal based explanation showing that the effect of scarcity salience on choices is mediated by consumers reported arousal level and moderated by an experimentally induced arousal state

job machine think tank or both what makes corporate spin offs different one way through which knowledge and technology transfer can take place is through the foundation of new firms by former employees of incumbent private firms in this paper we examine whether knowledge transferred from the incumbent causally affect employment growth and post entry innovation activities of the new firm we focus on start ups for which a new idea a new product technology production process or management concept which the founder developed during her work as an employee was essential for setting up the new business these firms are denoted corporate spin offs using data from german start ups founded in the period from 2005 to 2008 we apply nearest neighbour propensity score matching we find that corporate spin offs outperform other start ups founded by former employees of incumbent private firms that are not based on an essential idea in terms of post entry innovation activities however we cannot show that corporate spin offs benefit from the transferred idea in terms of employment growth we conclude that a transferred idea is primarily an input factor and a stimulus for subsequent post entry innovation activities of corporate spin offs

entrepreneurial enterprises endogenous ownership and the limits to firm size this paper develops a simple model of entrepreneurial enterprises the analysis differs from traditional work on entrepreneurship by analyzing why entrepreneurial activities are typically conducted in small firms owned by the entrepreneur i argue that ownership incentives are an advantage of small firms when the probability of success of an economic activity becomes small if becomes costly for large firms to commit to strong incentives and small worker owned firms emerge the paper discusses application of the theory to innovation wild cat oil exploration restaurants and retail trade professional practices salesmen and franchising

the impact of resource scarcity on price quality judgments consumers routinely encounter situations in which they perceive that resources are scarce however little is known about how this perception influences consumers use of price in their purchase decisions the present research seeks to fill this gap by examining the link between scarcity and the tendency to use price to judge product quality and the mechanisms underlying that link six studies and five more reported in the web appendix using multiple product categories and a variety of operationalizations of both scarcity and price quality judgments show that scarcity decreases consumers tendency to use price to judge product quality this occurs because scarcity induces a desire to compensate for the shortage and seek abundance and thereby reduces an individual s general categorization tendency because categorizing brings about a feeling of reduction this in turn hinders consumers from viewing products as belonging to different price tier groups and thus lowers their tendency to use price as a basis for judging product quality boundary conditions for the proposed effect are also identified the current research makes fundamental contributions to the literatures on scarcity price quality judgments and categorization

spending on daughters versus sons in economic recessions although parents often try not to favor one child we examine whether specific environmental factors might bias parents to favor children of one sex over the other this research draws on theory in evolutionary biology suggesting that investment in female versus male offspring depends on resource availability applying this to consumers a series of experiments show that poor economic conditions favor resource allocations to daughters over sons for example poor conditions led people to bequeath more assets to girls in their will and to choose girls to receive a us treasury bond and a beneficial extracurricular activity it is proposed that this happens because spending on children represents a reproductive investment and that boys and girls relative reproductive value varies with economic conditions supporting this account perceptions of which child will have more children statistically mediates the effect of economic conditions on preferences for girls consequently the effect is strengthened as a child approaches reproductive age and it is moderated by individual differences risk aversion and monogamy directly related to our theoretical model this research contributes to the consumer behavior literature by revealing how why and when environmental factors influence spending on girls versus boys

integration of serially sampled price information modeling and some findings focusing on the perceived value of an observed basket of items as the dependent variable the article suggests several rival models of integrating serially sampled price information within this context perceptual implications of different discount structures are noted also a computer controlled laboratory experiment is reported that attempts to provide guidance for subsequent studies that may compare the suggested models the results suggest that 1 store profile effects persist after exposure to price information 2 primacy effects are statistically significant but not strong and 3 a large number of noticeable discounts lead to a higher perceived value than a small number of extreme discounts

the rise of domestic outsourcing and the evolution of the german wage structure the nature of the relationship between employers and employees has been changing over the past three decades with firms increasingly relying on contractors temp agencies and franchises rather than hiring employees directly we investigate the impact of this transformation on the wage structure by following jobs that are moved outside the boundary of lead employers to contracting firms we develop a new method for identifying outsourcing of food cleaning security and logistics services in administrative data using the universe of social security records in germany we document a dramatic growth of domestic outsourcing in germany since the early 1990s event study analyses show that wages in outsourced jobs fall by approximately 10 15 relative to similar jobs that are not outsourced we find evidence that the wage losses associated with outsourcing stem from a loss of firm specific rents suggesting that labor cost savings are an important reason firms choose to contract out these services finally we tie the increase in outsourcing activity to broader changes in the german wage structure in particular showing that outsourcing of cleaning security and logistics services alone accounts for around 9 of the increase in german wage inequality since the 1980s

limited availability reduces the rate of satiation in general consumers enjoy products less with repeated consumption unfortunately there are few known ways to slow such satiation the authors show that consumers satiate more slowly on a product when it is available for consumption only at limited times specifically they find that perceived limited availability made a product more enjoyable and yet this effect largely emerged only after repeated consumption the authors attribute this finding to an urge to take advantage of a rare consumption opportunity which leads people to pay less attention to the quantity consumed and subsequently to experience less satiation a series of studies establish the effect of perceived limited availability on the rate of satiation show that it influences how much people eat provide mediation evidence of the proposed theoretical account and eliminate the effect by making salient the total amount consumed the authors conclude with implications of these findings

free trade areas in east asia discriminatory or non discriminatory ver the past decade we have witnessed the worldwide proliferation ofregional trade arrangements rtas even after the launch of the wtomultilateral trading system rtas have continued to spread however there havebeen marked variances across regions in terms of the degree to which regionaltrade integration has been carried out the east asian region is characterised bythe dearth of rtas regional integration moves have involved merely partial orloosely institutionalised groupings i e afta asean free trade area andapec asia paci c economic cooperation in particular the major three eastasian countries china japan and korea have tended to bypass the prevalenttrend of regionalism and instead have generally preferred multilateral trade liberal isation approaches under the gatt and wto regulations regarding rtas their stance against regionalism has mainly been for the following reasons i relative predominance of interregional trade and investment relations overintraregional transactions ii historical animosities stemming from the legaciesof japanese colonialism iii lack of central leadership and iv diversities inculture race language and level of economic development within the region in recent years however the region s support has shifted from multilateraltrade arrangements to rtas a turning point was the outbreak of the east asian nancial crisis in 1997 besides triggering massive economic unrest in east asia the crisis revitalised the demand for regional economic cooperation which calledfor more cooperation and policy coordination among neighbouring economies