Engaging the unengaged customer: The value of a retailer mobile app

Mobile apps are becoming a go-to tactic for retailers because they offer the promise of highly convenient digital engagement. We hypothesize that two types of customers are best served by these apps — “offline-only” customers currently purchasing exclusively from the retailer's physical store, and “distant” customers who reside far from the physical store. For offline-only customers, the app complements the physical engagement they currently have. For distant customers, the app offers convenient engagement their remoteness currently precludes. We model app access and purchase behavior of 629 customers who downloaded a retailer's app. We find that apps generate more incremental sales among distant customers compared to near customers, and more incremental sales among offline-only customers compared to online customers. On an illustrative base of 100 K app users, we find accessing the app would generate $2.3 M in incremental sales. Consistent with our segmentation results, we find that the users with the greatest purchase lift (9.5%) due to app usage are those that are distant and offline-only. Our results confirm the economic value of retailer apps and their role as a segmentation strategy to enhance customer engagement.     

FDI and Financial Market Development in Africa

The literature on the relationship between foreign direct investment (FDI), financial market development (FMD) and economic growth focuses mainly on two aspects: the relationship between FDI and economic growth, and the role played by FMD in that linkage. The literature is almost silent on the relationship and the direction of causality between FDI and FMD. Although it has been established that FDI contributes more to growth in countries with a more developed financial market, it is not clear how FDI and FMD interact with each other. The aim of this paper is to fill this gap in the African context. Particularly, in Africa, where stock markets experience low liquidity and less transparency, FDI can be an impetus for financial market reforms and serve as a mechanism to improve the transparency and the depth of the financial markets. Also, well‐functioning financial markets can help channel foreign investments more efficiently into productive sectors, and therefore create more value for investors, hence making the countries more attractive to FDI. In short, both FDI and FMD will impact each other simultaneously, which is confirmed by our findings. We document a bidirectional causality between FDI and FMD. Furthermore, the multivariate regression results of the system of simultaneous equations also confirm the positive relationship between FDI and FMD in Africa. We also find that FDI contributes to economic growth in Africa after controlling for endogeneity between FDI, FMD and economic growth.     

Has stock exchange demutualization improved market quality? International evidence

Review of Quantitative Finance and Accounting - We investigate the market quality effects of stock exchange demutualization and find that demutualized exchanges have achieved significant...     

Priming skepticism: Unintended consequences of one-sided persuasion knowledge access

Scholars have historically assumed that consumers' persuasion knowledge is invariably linked to skepticism about advertising and marketing. As a result, studies have often used skepticism-focused stimuli to prompt persuasion knowledge access. However, as originally conceptualized, persuasion knowledge also includes an understanding of persuasion tactics that are trusted and believed, which suggests that accessing persuasion knowledge does not necessarily make consumers more skeptical. In this paper, we propose that, for at least some persuasion knowledge research questions, skepticism-focused interventions may be too “one-sided” because they bias participants to consider only the skeptical side of persuasion knowledge. The purpose of the present research is to test whether the “one-sided” persuasion knowledge interventions that are used in persuasion knowledge research encourage skepticism more than balanced interventions that focus consumers on the negative and positive motives that may underlie persuasive communication. Across three experiments with three distinct subject pools and over 2,500 participants, we demonstrate that one-sided versus balanced manipulations of persuasion knowledge can have differential effects on consumer skepticism. This is an important finding because skepticism-focused operationalizations are frequently employed in persuasion knowledge research.     

Do Firms Spend More on Suppliers That Have Environmental Expertise? An Empirical Study of U.S. Manufacturers’ Procurement Spend

Stakeholders expect focal firms to improve their environmental performance. While firms may be able to accumulate the environmental expertise needed to achieve this goal internally, doing so may require significant time and resource commitments. Alternatively, buyer firms can leverage their suppliers’ existing environmental expertise and gain access to such expertise when they purchase products and services from these suppliers. The purpose of this study was to develop and test theory regarding under what conditions suppliers’ environmental expertise influences a buying firms’ procurement spend with these suppliers. We ground our study in transaction cost economics and agency theories and empirically test our hypotheses using a unique buyer–supplier dyadic data set. We find that buyer firms are willing to increase their overall business spend with suppliers that have strong environmental expertise, particularly when the buyer firms are more profitable and have higher levels of absorptive capacity. However, we find the opposite effect when the buyer firm’s executive compensation is linked to the firm’s environmental, social, and governance (ESG) performance. Likewise, we also find that the buyer firm’s environmental concern ratings negatively moderate the relationship between the supplier’s environmental expertise and the buyer’s procurement spend with the supplier.     

Marriage,Divorce, and Social Safety Net Policy

I study the effects of the Earned Income Tax Credit (EITC) and welfare reforms of the 1990s on flows into and out of marriage. I use test scores to predict who is most likely to be affected by the policy changes, and employ a flexible functional form to estimate heterogeneous effects. I find that lower-earning married women are more likely to divorce as the EITC expands, but I find no effect of EITC generosity on marriage. I find little effect of welfare generosity on marriage or divorce flows for any group. My results suggest that there are nonsymmetric responses to policy on flows into and out of marriages.     

The Intergenerational Propagation of Wealth Inequality

This paper highlights the crucial role of demographic assumptions in models of the intergenerational transmission of wealth inequality. Specifically, we show that Alan Blinder's surprising predictions that bequest and mating practices can sustain but cannot cause wealth inequality are extremely fragile. We show that these predictions depend on a common and apparently minor demographic assumption: fixed sex ratios in family composition. We implement the Blinder model as an agent‐based simulation and show that without this demographic assumption such familial institutions are causative for wealth inequality, even in the long run.     

Stock exchange demutualization,self-listing and performance: The case of the Australian Stock Exchange

This paper examines the effects of the recent spate of financial exchange mutual-to-stock conversion phenomenon on the performance of listed exchanges and the quality of the stock market using the Australian Stock Exchange (ASX) as a case study. We find that the ASX stock significantly outperformed the stock index and the control group on a market-adjusted return basis. The stock market performance is driven by strong operating performance. The profitability ratios of the ASX have significantly improved in the five years following the demutualization and self-listing. The performance improvements remain significant even after controlling for growth in the Australian economy. From a market quality perspective, we document evidence of increased trading activity by foreign investors after ASX’s demutualization and self-listing. Interestingly, we also find that bid-ask spreads of the stock market have narrowed in the post-conversion period. In particular, small-cap firms have become more liquid. The results show that stock exchange conversion from mutual to publicly traded exchange is not only value enhancing for the exchange and its shareholders, but it is also beneficial for the stock market as a whole.     

Preference for safety under the Choquet model: in search of a characterization

Victor prefers safety more than Ursula if whenever Ursula prefers a constant to an uncertain act, so does Victor. This paradigm, whose expected utility (EU) version is Arrow and Pratt’s more risk aversion concept, will be studied in the Choquet expected utility (CEU) model. Necessary condition Pointwise inequality between a function of the utility functions and another of the capacities is necessary and sufficient for the preference by Victor of safety over a dichotomous act whenever such is the preference of Ursula. However, increased preference for safety versus dichotomous acts does not imply preference by Victor of safety over a general act whenever such is the preference of Ursula. A counterexample will be provided, via the casino theory of Dubins and Savage. Sufficient condition Separation of the two functions by some convex function is sufficient for Victor to prefer safety more than Ursula, over general acts. Furthermore, a condition on the capacities will be presented for simplicity seeking, the preference by Victor over any act for some dichotomous act that leaves Ursula indifferent. This condition is met in particular if Victor’s capacity is a convex function of Ursula’s capacity. For these cases, the pointwise inequality (necessary) condition is a characterization of greater preference for safety, extending the Arrow–Pratt notion from EU to CEU and rank-dependent utility (RDU). These inequalities preserve the flavor of the “more pessimism than greediness” characterization of monotone risk aversion by Chateauneuf, Cohen and Meilijson in the RDU model and its extension by Grant and Quiggin to CEU. Preferences between safety and dichotomous acts are at the core of the biseparable preferences model of Ghirardato and Marinacci.     

MONETARY AND FISCAL INTERACTIONS: SHORT‐RUN AND LONG‐RUN IMPLICATIONS

We model policy interactions in a growing economy. Unemployment can persist and matters for the real wage; conflicting claims underpin inflation outcomes; and aggregate demand determines capacity utilization and unemployment. Monetary policy is characterized by a Taylor rule. Fiscal policy is characterized by a marginal tendency to run deficits or surpluses. We address three questions: can monetary policy ensure macroeconomic stability in the absence of coordinated fiscal policy, can fiscal policy ensure macroeconomic stability when the monetary authority pegs the interest rate, and can policy authorities trade‐off some sustained inflation for a long‐run improvement in unemployment rates?