consumer protection and contingent charges contingent charges for financial services such as fees for unauthorized overdrafts are often controversial we study the economics of contingent charges in a stylized setting with naive and sophisticated consumers we contrast situations where the naive benefit from the presence of sophisticated consumers with situations where competition works to subsidize the sophisticated at the expense of the naive arguably unfairly the case for regulatory intervention in these situations depends in good part but not only on the weight placed on distributional concerns the economic and legal issues at stake are well illustrated by a case on bank charges recently decided by the u k supreme court jel d14 d18 g21 g28 l51

bidding behavior in descending and ascending auctions this research examines how individual differences and institutional practices influence consumer bidding in auctions bidders may be motivated by different goals e g thrill of winning the item with minimal attention to what they pay for it versus prudence winning the item at a price at or below its perceived value also innate or auctioneer induced differences may exist in the precision and salience of bidder cognitions about the item s value we report two studies on how these motivational and cognitive factors influence bids in descending and ascending auctions respectively each study also manipulated a situational variable wait time at each price step the two auctions realized different average prices for the same item set average bids were higher in the descending versus ascending auction in several study conditions in both auction formats bidders primed with thrill versus prudence bid higher but more precise and or salient values attenuated this goal effect among other results in the descending auction longer wait times elicited higher bids from bidders primed with thrill but not prudence in the ascending auction longer wait times produced lower bids for bidders primed with prudence but not thrill these findings on consumer bidding behavior have practical implications for auction design

price coherence and excessive intermediation suppose an intermediary provides a benefit to buyers when they purchase from sellers using the intermediary s technology we develop a model to show that the intermediary would want to restrict sellers from charging buyers more for transactions it intermediates with this restriction an intermediary can profitably raise demand for its services by eliminating any extra price buyers face for purchasing through the intermediary we show that this leads to inflated retail prices excessive adoption of the intermediaries services over investment in benefits to buyers and a reduction in consumer surplus and sometimes welfare competition among intermediaries intensifies these problems by increasing the magnitude of their effects and broadening the circumstances in which they arise we discuss applications to payment card systems travel reservation systems rebate services and various other intermediaries jel codes d40 l11 l14 l42

consumer trust social marketing and ethics of welfare exchange the global corporate scandals such as enron worldcom and global crossing have raised fundamental issues of business ethics as well as economic social and anthropological questions concerning the nature of business competition and global capitalism the purpose of this conceptual paper is to introduce the concept of welfare exchange to the existing notions of economic social and anthropological notions of business and exchange in markets and society in the 21st century global competition and business success in the 21st century continue to raise the nature of economic value and the interaction among diverse actors in international markets institutions and society we believe that the nature of such exchange between consumers and organizations which can also be termed social marketing need to increasingly take into account a welfare and ethical component in this paper we introduce our concept of welfare exchange to emphasize the importance of such welfare and ethical issues in the global business environment of the 21st century

e ztax tax salience and tax rates this paper examines whether the salience of a tax system affects equilibrium tax rates i analyze how tolls change after toll facilities adopt electronic toll collection etc drivers are substantially less aware of tolls paid electronically i estimate that in steady state tolls are 20 to 40 percent higher than they would have been without etc consistent with a salience based explanation for this toll increase i find that under etc driving becomes less elastic with respect to the toll and toll setting becomes less sensitive to the electoral calendar alternative explanations appear unlikely to be able to explain the findings

optimal card payment systems abstract this paper presents a model of a card payment system to address the pricing and rules that govern such systems it evaluates the social optimality of privately set interchange fees and the adoption of a rule by payment systems to prevent merchants surcharging for card transactions using two extremes of merchant pricing monopolistic pricing and perfect competition both types of merchant pricing constrain the ability of card schemes to use interchange fees and the no surcharge rule in anticompetitive ways although for quite different reasons the positive role of the no surcharge rule in preventing excessive merchant surcharging is also highlighted

regulating consumer financial products evidence from credit cards we analyze the effectiveness of consumer financial regulation by considering the 2009 credit card accountability responsibility and disclosure card act we use a panel data set covering 160 million credit card accounts and a difference in differences research design that compares changes in outcomes over time for consumer credit cards which were subject to the regulations to changes for small business credit cards which the law did not cover we estimate that regulatory limits on credit card fees reduced overall borrowing costs by an annualized 1 6 of average daily balances with a decline of more than 5 3 for consumers with fico scores below 660 we find no evidence of an offsetting increase in interest charges or a reduction in the volume of credit taken together we estimate that the card act saved consumers 11 9 billion a year we also analyze a nudge that disclosed the interest savings from paying off balances in 36 months rather than making minimum payments we detect a small increase in the share of accounts making the 36 month payment value but no evidence of a change in overall payments jel codes d0 d14 g0 g02 g21 g28 l0 l13 l15

is ecommerce boundary less effects of individualism collectivism and uncertainty avoidance on internet shopping from publicly available data we identified two national culture dimensions individualism collectivism and uncertainty avoidance and their interaction that influences internet shopping rates across a wide spectrum of countries together these factors accounted for 14 of the explained variance on top of the combined variance of 63 explained by national income level educational level economic growth rate unemployment rate and crime rate in predicting internet shopping rates for countries lower in uncertainty avoidance individualist cultures show higher internet shopping rates than do collectivist cultures implications for national and internet firm level web design strategies are discussed

endogenous monetary policy with unobserved potential output this paper characterizes monetary policy when policymakers are uncertain about the extent to which fluctuations in output and inflation are due to changes in potential output or to cyclical demand and cost shocks our results suggest an explanation for the inflation of the 1970s and the price stability of the 1990s it is shown that 1 policy is likely to be excessively loose for some time when there is a large decrease in potential output in comparison to a full information benchmark 2 retrospective policy errors and errors in forecasting potential output and the output gap are generally serially correlated 3 the increase in the fed s conservativeness between the 1970s and the 1990s implies that the information problem had greater consequences in the former period

consumer research for consumers this article outlines a consumer focused approach for the study of consumer behavior i argue that much of the existing literature by developing knowledge that focuses on the determinants of consumer purchasing is implicitly biased toward a marketing perspective of consumer behavior in contrast i propose the need for a consumer focused approach that would advance knowledge aimed at helping consumers make wiser purchases this approach should address the most important and challenging consumer decisions describe consumer behavior in a manner that leads to prescriptions consider the actions of other parties in the marketplace and identify biases unique to or exacerbated by the consumer context this article then illustrates what such a consumer focused approach would imply for consumer research in three areas negotiations financial services and auctions

paying not to go to the gym how do consumers choose from a menu of contracts we analyze a novel dataset from three u s health clubs with information on both the contractual choice and the day to day attendance decisions of 7 752 members over three years the observed consumer behavior is difficult to reconcile with standard preferences and beliefs first members who choose a contract with a flat monthly fee of over 70 attend on average 4 3 times per month they pay a price per expected visit of more than 17 even though they could pay 10 per visit using a 10 visit pass on average these users forgo savings of 600 during their membership second consumers who choose a monthly contract are 17 percent more likely to stay enrolled beyond one year than users committing for a year this is surprising because monthly members pay higher fees for the option to cancel each month we also document cancellation delays and attendance expectations among other findings leading explanations for our findings are overconfidence about future self control or about future efficiency overconfident agents overestimate attendance as well as the cancellation probability of automatically renewed contracts our results suggest that making inferences from observed contract choice under the rational expectation hypothesis can lead to biases in the estimation of consumer preferences

monetary policy and inflation in the 70s an influential paper by clarida gal i and gertler 2000 has attributed the great inflation of the 1970 to the violation of the taylor principle in the conduct of us monetary policy weak indeterminacy inducing response to expected inflation we evaluate this thesis in the context of a standard nk model against a version of the model that incorporates incomplete information learning about the true state of the economy the likelihood based estimation of the model overwhelmingly favors the specification with indeterminacy over the alternatives with determinacy independent of the presence and size of mis perceptions jel class e32 e52

incomplete contracts and strategic ambiguity why are observed contracts so often incomplete in the sense that they leave contracting parties obligations vague or unspecified traditional answers to this question invoke transaction costs or bounded rationality in contrast the authors argue that such incompleteness is often an essential feature of a well designed contract specifically once some aspects of performance are unverifiable it is often optimal to leave other verifiable aspects of performance unspecified the authors explore the conditions under which this occurs and investigate the structure of optimal contracts when these conditions are satisfied copyright 1998 by american economic association

monetary policy rules macroeconomic stability and inflation a view from the trenches i estimate a forward looking monetary policy reaction function for the federal reserve for the periods before and after paul volcker s appointment as chairman in 1979 using information that was available to the fomc in real time from 1966 to 1995 the results suggest broad similarities in policy and point to a forward looking approach to policy consistent with a strong reaction to inflation forecasts during both periods this contradicts the hypothesis based on analysis with ex post constructed data that the instability of the great inflation was the result of weak fomc policy responses to expected inflation a difference is that prior to volcker s appointment policy was too activist in reacting to perceived output gaps that retrospectively proved overambitious drawing on contemporaneous accounts of fomc policy i discuss the implications of the findings for alternative explanations of the great inflation and the improvement in macroeconomic stability since then

an interpretive examination of the development of cultural sensitivity in international business cultural sensitivity is assumed to be important in international business yet little empirical work explores how cultural sensitivity actually develops in depth interviews with buyers from the asian pacific rim were conducted and support was found for a four stage model of cross cultural sensitivity in which buyers move through the stages of romantic sojourner foreign worker skilled worker and partner this paper explores the development and evolution of cultural sensitivity as it interacts with trust and development of international business relationships

nash s theory of cooperative games as a predictor of the outcomes of buyer seller negotiations an experiment in media purchasing the authors report an experimental investigation of the ability of nash s theory of cooperative games to predict the outcomes of buyer seller negotiations using the purchase of media time as an ex

buyer seller negotiations around the pacific rim differences in fundamental exchange processes the determinants of buyer seller negotiations in four cultures are investigated in a laboratory simulation one hundred thirty eight american 54 chinese 42 japanese and 38 korean business people participated in a two person buyer seller intracultural negotiation simulation in negotiations between americans the use of more problem solving bargaining strategies positively influenced negotiation outcomes in negotiations between chinese more competitive strategies led to better results in japanese and korean negotiations buyers achieved higher economic rewards than sellers in all four cultures bargainers were more satisfied with negotiation outcomes when partners were rated more attractive

testing for indeterminacy an application to u s monetary policy reply this paper considers a prototypical new keynesian model in which the equilibrium is undetermined if monetary policy is passive the likelihood based estimation of dynamic equilibrium models is extended to allow for indeterminacies and sunspot fluctuations we construct posterior weights for the determinacy and indeterminacy region of the parameter space and estimates for the propagation of fundamental and sunspot shocks according to the estimated model u s monetary policy post 1982 is consistent with determinacy whereas the pre volcker policy is not we find that before 1979 indeterminacy substantially altered the propagation of shocks

monetary policy and stagflation in the uk the volatile behavior of inflation output and interest rates in the united kingdom prior to the 1990s helps discriminate between rival explanations for the outbreak of stagflation we examine alternative hypotheses with a new keynesian model of aggregate demand and inflation determination estimated on quarterly uk data for 1959 2000 our model features is and phillips curves based on optimizing behavior and fully incorporates the distinction between detrended output and the output gap stressed by optimizing analysis using simulations of our model as well as information on the real time views of policymakers we test alternative explanations for the outbreak of inflation in the united kingdom in the 1960s and 1970s we find that inaccurate estimates of the degree of excess demand in the economy contributed significantly to the outbreak but we also find a major role for the failure at the time to recognize the importance of monetary policy as opposed to nonmonetary devices in controlling inflation

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

product line rivalry and market segmentation with an application to automobile optional engine pricing this paper addresses the questions whether and when the pricing practices on base products may differ from those of premium products sold with options or add ons various alternative models are considered a monopoly model a model of brand rivalry with full consumer information and a model of rivalry in which consumers are only well informed about base product prices only the brand rivalry model with limited consumer information predicts that premium products have larger percentage markups than base products provided that brand rivalry is sufficiently intense empirical evidence on base and premium product pricing in the automobile market is consistent with the limited information model and inconsistent with the other two models

monopoly with incomplete information recent theoretical research on principal agent relationships has emphasized incentive problems that arise when the parties involved are constrained by either asymmetric information or their inability to monitor each other s actions here we concentrate on the former constraint and consider the case of a single principal the monopolist the main contribution is to show that under a separability assumption strong conclusions can be drawn about the nature of optimal incentive schemes although the primary focus is on optimal quantity discounts in a monopolized market the results also shed light on related topics such as optimal income taxation and commodity bundling

indicator variables for optimal policy the optimal weights on indicators in models with partial information about the state of the economy and forward looking variables are derived and interpreted both for equilibria under discretion and under commitment an example of optimal monetary policy with a partially observable potential output and a forward looking indicator is examined the optimal response to the optimal estimate of potential output displays certainty equivalence whereas the optimal response to the imperfect observation of output depends on the noise in this observation

theory and misbehavior of first price auctions comment glenn harrison s recent 1989 article in this review has provoked the loudest debate yet heard among experimental economists his critique of the james cox vernon smith and james walker 1983a b 1985a b 1988 henceforth csw laboratory studies of first price sealed bid auctions with independent and private values in my view raises a fundamental methodological issue that is well worth debating and the csw research program deserves further discussion in this short comment i confine myself to what i see as the most important issues and do not try to address all evidence relevant to the ongoing debate first i summarize harrison s central argument very briefly after pointing out two shortcomings in harrison s specific analysis of csw i propose a methodological reconciliation finally and with some trepidation since my own experience with the auction data is relatively slight i suggest an alternative approach to understanding the anomalies discovered by csw

shrouded attributes consumer myopia and information suppression in competitive markets bayesian consumers infer that hidden add on prices e g the cost of ink for a printer are likely to be high prices if consumers are bayesian firms will not shroud information in equilibrium however shrouding may occur in an economy with some myopic or unaware consumers such shrouding creates an inefficiency which firms may have an incentive to eliminate by educating their competitors customers however if add ons have close substitutes a curse of debiasing arises and firms will not be able to profitably debias consumers by unshrouding add ons in equilibrium two kinds of exploitation coexist optimizing firms exploit myopic consumers through marketing schemes that shroud high priced add ons in turn sophisticated consumers exploit these marketing schemes it is not possible to profitably drive away the business of sophisticates it is also not possible to profitably lure either myopes or sophisticates to nonexploitative firms we show that informational shrouding flourishes even in highly competitive markets even in markets with costless advertising and even when the shrouding generates allocational inefficiencies

cooperation among competitors some economics of payment card associations we analyze platforms in two sided markets with network externalities using the specific context of a payment card association we study the cooperative determination of the interchange fee by member banks the interchange fee is the access charge paid by the merchants banks the acquirers to cardholders banks the issuers we develop a framework in which banks and merchants may have market power and consumers and merchants decide rationally on whether to buy or accept a payment card after drawing the welfare implications of a cooperative determination of the interchange fee we describe in detail the factors affecting merchant resistance compare cooperative and for profit business models and make a first cut in the analysis of system competition

influences on exchange processes buyers preconceptions of a seller s trustworthiness and bargaining toughness exchange theories posit that trust has an important and favorable influence on dyadic interactions this paper examines the notion that trust plays a key role in making a seller s tough bargaining strategy successful in a bargaining experiment we manipulated subjects preconceptions about a seller s trustworthiness and bargaining toughness as hypothesized a seller s expected trustworthiness plus toughness in bargaining led to higher levels of buyer seller cooperation and agreement and a higher level of buyer concessions

the ability of nash s theory of cooperative games to predict the outcomes of buyer seller negotiations a dyad level test this research develops and implements a dyad level procedure for testing whether the outcomes of buyer seller negotiations correspond to settlements prescribed by nash s theory of cooperative games the procedure entails a multivariate statistical test in which some parameters are estimated by simulation while others are provided directly from the assessment of negotiator utility functions by means of conjoint analysis the procedure is applied to an experiment in which subjects participated in a realistic role playing exercise that replicated the purchase of television advertising time results indicate that at the 0 01 significance level 57 8 of the dyads can be rejected as not having achieved nash solutions these results and their implications for marketing practitioners as well as future research are discussed

the importance of others welfare in evaluating bargaining outcomes this research proposes that negotiators consider each other s payoffs in their evaluation of potential settlements beyond the level necessary to maintain the bargaining relationship we further hypothesize that the way in which negotiators weight their opponents payoffs relative to their own is a function of characteristics of the relationship and of the bargainers personalities specifically we consider liking of the other party payoff expectations satisfaction with past settlements the likelihood of future negotiations egocentricity and power orientation we demonstrate the impact of these factors on the satisfaction negotiators derive from profiting more and less than their opponents using data from an experiment in which subjects negotiate with computer simulated opponents

missed sales and the pricing of ancillary goods firms often sell a basic good as well as ancillary ones hold up concerns have led to ancillary good regulations such as transparency and price caps the hold up narrative however runs counter to evidence in many retail settings where ancillary good prices are set below cost e g free shipping or limited card surcharging in countries where the no surcharge rule was lifted we argue that the key to unifying these conflicting narratives is that the seller may absorb partly or fully the ancillary good s cost so as not to miss sales on the basic good a supplier with market power on the ancillary good market then takes advantage of cost absorption and jacks up its wholesale price hold ups occur only when consumers are initially uninformed or naive about the drip price and shopping costs are high the price of the basic good then acts as a signal of the drip price since a high markup on the basic good makes the firm more wary of missed sales regardless of whether consumers are informed uninformed but rational or naive mandating price transparency and banning loss making on the ancillary good leads to i an efficient consumption of the ancillary good and ii a reduction of its wholesale price generating strict welfare gains

6 revenue effects and information processing in english common value auctions an experiment analyzing behavior in english common value auctions is reported english auctions raise more revenue than first price auctions only when bidders do not suffer from a strong winner s curse agents employ other bidders dropout prices along with their private information as nash bidding theory predicts however a simple and natural signal averaging rule which does not require recognizing the adverse selection effect of winning the auction better characterizes the data than the nash rule monte carlo simulations using fiml estimates of the signal averaging rule predict a number of data characteristics not directly employed in the estimation procedure copyright 1996 by american economic association

taking stock of stockbrokers exploring momentum versus contrarian investor strategies and profiles two studies were conducted among professional security analysts to explore their patterns of decision making while managing investment portfolios in study 1 a computer based simulation the analysts styles differed markedly with most exhibiting either a momentum or contrarian approach as indicated by responses to portfolio stock price changes study 2 used a verbal protocol procedure and semistructured depth interviews to probe the analysts thought processes momentum and contrarian investors were found to differ on a number of dimensions including price expectations age experience raw performance risk propensity cognitive style knowledge calibration and strategy adaptivity implications and limitations are discussed

inferior products and profitable deception we analyse conditions facilitating profitable deception in a simple model of a competitive retail market firms selling homogenous products set anticipated prices that consumers understand and additional prices that naive consumers ignore unless revealed to them by a firm where we assume that there is a binding floor on the anticipated prices our main results establish that bad products those with lower social surplus than an alternative tend to be more reliably profitable than good products specifically 1 in a market with a single socially valuable product and sufficiently many firms a deceptive equilibrium in which firms hide additional prices does not exist and firms make zero profits but perversely 2 if the product is socially wasteful then a profitable deceptive equilibrium always exists furthermore 3 in a market with multiple products since a superior product both diverts sophisticated consumers and renders an inferior product socially wasteful in comparison it guarantees that firms can profitably sell the inferior product by deceiving consumers we apply our framework to the mutual fund and credit card markets arguing that it explains a number of empirical findings regarding these industries

consumer inattention and bill shock regulation for many goods and services such as electricity health care cellular phone service debit card transactions or those sold with loyalty discounts the price of the next unit of service depends on past usage as a result consumers who are inattentive to their past usage but are aware of contract terms may remain uncertain about the price of the next unit i develop a model of inattentive consumption derive equilibrium pricing when consumers are inattentive and evaluate bill shock regulation requiring firms to disclose information that substitutes for attention when inattentive consumers are sophisticated but heterogeneous in their expected demand bill shock regulation reduces social welfare in fairly competitive markets which may be the effect of the federal communication commission s recent bill shock agreement if some consumers are attentive while others naively fail to anticipate their own inattention however then bill shock regulation increases social welfare and can benefit consumers hence requiring zero balance alerts in addition to the federal reserve s new opt in rule for debit card overdraft protection may benefit consumers

are two better than one bargaining behavior and outcomes in an asymmetrical power relationship many consumer transactions are characterized by bargaining between parties holding unequal power positions the group polarization hypothesis suggests that the effects of group size will differ for high and low power bargainers accordingly power position and size of bargaining unit one two were manipulated in a threat vulnerable 2 2 game factor effects on economic performance communication style and post bargaining attitudes were examined at the unit and system levels supporting the group polarization hypothesis two person groups tend to magnify the power manipulation i e group size interacts with power position on post bargaining attitudes and system performance

overconfidence insurance and paternalism it is well known that when agents are fully rational compulsory public insurance may make all agents better off in the rothschild and stiglitz 1976 model of insurance markets we find that when sufficiently many agents underestimate their personal risks compulsory insurance makes low risk agents worse off hence behavioral biases may weaken some of the well established rationales for government intervention based on asymmetric information

must take cards merchant discounts and avoided costs antitrust authorities often argue that merchants cannot reasonably turn down payment cards and therefore must accept excessively high merchant discounts the paper attempts to shed light on this must take cards view from two angles first the paper gives some operational content to the notion of must take card through the avoided cost test or tourist test would the merchant want to refuse a card payment when a non repeat customer with enough cash in her pocket is about to pay at the cash register it analyzes its relevance as an indicator of excessive interchange fees second it identifies four key sources of potential social biases in the payment card systems determination of interchange fees internalization by merchants of a fraction of cardholder surplus issuers per transaction markup merchant heterogeneity and extent of cardholder multi homing it compares the industry and social optima both in the short term fixed number of issuers and the long term in which issuer offerings and entry respond to profitability

consumer protection and the incentive to become informed we discuss the impact of consumer protection policies on consumer incentives to become informed of the best deals available in the market in a market with costly consumer search we find that imposing a cap on suppliers prices reduces the incentive to engage in search with the result that prices paid by consumers both informed and uninformed may rise in a related model where consumers have the ability to refuse to receive marketing we find that this ability softens price competition and can make all consumers worse off

a model of add on pricing this paper examines competitive price discrimination with horizontal and vertical taste differences consumers with higher valuations for quality are assumed to have stronger brand preferences two models are considered a standard competitive price discrimination model in which consumers observe all prices and an add on pricing game in which add on prices are naturally unobserved and firms may advertise a base good at a low price in hopes of selling add ons at high unadvertised prices in the standard game price discrimination is self reinforcing the model sometimes has both equilibria in which the firms practice price discrimination and equilibria in which they do not the analysis of the add on pricing game focuses on the chicago school argument that profits earned on add ons will be competed away via lower prices for advertised goods a conclusion is that add on practices can raise equilibrium profits by creating an adverse selection problem that makes price cutting unappealing although profitable when jointly adopted using add on pricing is not individually rational in a simple extension with endogenous advertising practices and costless advertising several models that could account for add on pricing are discussed

restoring rational choice the challenge of consumer financial regulation abstract this lecture considers the case for consumer financial regulation in an environment where many households lack the knowledge to manage their financial affairs effectively the lecture argu

why inflation rose and fell policy makers beliefs and u s postwar stabilization policy this paper provides an explanation for the run up of u s inflation in the 1960s and 1970s and the sharp disinflation in the early 1980s which standard macroeconomic models have difficulties in addressing i present a model in which rational policymakers learn about the behavior of the economy in real time and set stabilization policy optimally conditional on their current beliefs the steady state associated with the self confirming equilibrium of the model is characterized by low inflation however prolonged episodes of high inflation ending with rapid disinflations can occur when policymakers underestimate both the natural rate of unemployment and the persistence of inflation in the phillips curve i estimate the model using likelihood methods the estimation results show that the model accounts remarkably well for the evolution of policymakers beliefs stabilization policy and the postwar behavior of inflation and unemployment in the united states

optimal sales contracts with withdrawal rights we introduce ex post participation constraints in the standard sequential screening model this captures the presence of consumer withdrawal rights as for instance mandated by european union regulation of distance sales contracts with such additional constraints the optimal contract is static and unlike with only ex ante participation constraints does not elicit the agent s information sequentially this holds whenever differences in ex ante and ex post outside options are below a positive upper bound welfare effects of mandatory withdrawal rights are ambiguous since it is insufficient in our setting to consider only local incentive constraints we develop a novel technique to identify the relevant global constraints

incentives at the counter an empirical analysis of surcharging card payments and payment behaviour in the netherlands in card payment systems no surcharge rules prohibit merchants from charging consumers extra for card payments however such rules are prohibited in the netherlands dutch retailers are allowed to surcharge consumers for debit card use this setting permits an empirical analysis of the impact of surcharging card payments on merchant acceptance and consumer payment choice based on consumer and retailer survey data our analysis shows that surcharging steers consumers away from using debit cards towards cash half of the observed difference in debit card payment shares across retailers can be explained by this surcharge effect removing debit card surcharges may induce cost savings of more than eur 50 million in the long run

desire to acquire powerlessness and compensatory consumption three experiments examine how power affects consumers spending propensities by integrating literatures suggesting that a powerlessness is aversive b status is one basis of power and c products can signal status the authors argue that low power fosters a desire to acquire products associated with status to compensate for lacking power supporting this compensatory hypothesis results show that low power increased consumers willingness to pay for auction items and consumers reservation prices in negotiations but only when products were status related the link between powerlessness and compensatory consumption has broad implications both for consumers health and well being and for understanding the psychological state of power

an empirical investigation of the dynamic effect of marlboro s permanent pricing shift the strategy philip morris adopted in 1993 featured a one time permanent publicly announced price cut an event referred to as marlboro friday little is known about the impact of permanent and publicly announced price cuts on consumer brand switching behaviors for an addictive product in the context of marlboro friday we investigate 1 how consumers brand choices are affected by a permanent price cut 2 whether differential and dynamic effects of permanent price cuts occur for different types of consumers and 3 the implications of publicly announced permanent price cuts on consumer brand switching behavior in the long run we develop a dynamic structural brand choice model that allows for consumer forward looking behavior learning and addiction and investigate how consumers adjusted their brand choice behaviors before and after this permanent price cut using unique consumer panel data pertaining to cigarette purchases before and after the event we provide behavioral explanations of whether and how the drastic and permanent price cut represented an effective step to encourage brand switching for an addictive product and a necessary step for philip morris to combat the growing market share of generic brands

theory and misbehavior of first price auctions recent experimental evidence appears to reject simple nash equilibrium models of bidding behavior in first price auctions the author presents a methodological critique of this evidence existing tests have concentrated on deviations of subjects from predictions in the message space of the action bid deviations the author suggests that it is more natural to evaluate subject behavior in expected payoff space he concludes that the evidence against the simple models is not significant enough to warrant their rejection copyright 1989 by american economic association

from the editors experimental designs in international business research the question that motivated this editorial was where are the ib experiments the short answer is that experiments are largely absent from the ib literature and we argue that they shouldn t be experimental methods offer the opportunity to significantly improve the evidence for the causal relationships in international business research in a variety of ways in this article we highlight the value and limitations of experiments in ib research and explain the basic tenets of experimental design and thinking with the goal of encouraging the submission of more papers with an experimental design to jibs