Random regret minimization for consumer choice modeling: Assessment of empirical evidence

This paper introduces to the field of marketing a regret-based discrete choice model for the analysis of multi-attribute consumer choices from multinomial choice sets. This random regret minimization (RRM) model, which has recently been introduced in the field of transport, forms a regret-based counterpart of the canonical random utility maximization (RUM) paradigm. This paper assesses empirical results based on 43 comparisons reported in peer-reviewed journal articles and book chapters, with the aim of finding out to what extent, when, and how RRM can form a viable addition to the consumer choice modeler's toolkit. The paper shows that RRM and hybrid RRM–RUM models outperform RUM counterparts in a majority of cases, in terms of model fit and predictive ability. Although differences in performance are quite small, the two paradigms often result in markedly different managerial implications due to considerable differences in, for example, market share forecasts.     

Modeling and Measuring Economic Reality: Reply to the Reviews

To begin with, we'd like to express our appreciation to our three commentators for their thoughtful and helpful reviews. Like the founders of the subject, we believe, and our reviewers seem to agree, that structural econometrics has the potential to enable us to develop serious working models of how different economies actually operate, and also to tell us something about the changing patterns of their growth and transformation. But both we and our reviewers agree that there is a great deal wrong with the way econometrics is practiced today.     

The effect of controversial global sourcing practices on the ethical judgments and intentions of U.S. consumers

Global sourcing has led to lower cost and more effective supply chains for many companies. However, when the cost-driven practices of many suppliers in these chains come to light there is often considerable debate over the ethics of these practices. This research uses the well-known Hunt–Vitell framework as the theoretical foundation for a structural equation model of the deontological and teleological evaluations used by consumers when making ethical judgments of a firm's controversial cost-driven global sourcing practices. Data from a large-scale U.S. consumer survey show the importance of deontological and teleological evaluations in forming consumers’ ethical judgments of global sourcing practices, and establish a strong relationship between ethical judgment and the intention of consumers to alter consumption of a firm's products. Extensions to the framework and demographic analyses for age, gender, and income provide insights as to how perceptions of these practices affect consumer evaluations of a company involved in global sourcing and how consumers actualize their resultant intentions.     

An Easily Implemented Framework for Forecasting Ticket Sales to Performing Arts Events

This paper presents an easily used framework for modeling ticket sales to performing arts and entertainment events. Unlike existing efforts in this area, our framework allows us to: (1) model demand for events that consist of more than a single performance; (2) account for the influence of promotional effort on ticket sales; and (3) account for sellouts of some performances. The framework is applied to ticket sales for a university theater company, where it predicts ticket sales well in both an estimation and holdout sample. We discuss how the framework has influenced the company's marketing decisions.     

The Effects of Moral Reasoning and Self-Monitoring on CFO Intentions to Report Fraudulently on Financial Statements

This study adapts the theory of reasoned action (Ajzen and Fishbein, 1980) to the behavior of fraudulent reporting on financial statements so as to examine the effects of moral reasoning and self-monitoring on intention to report fraudulently, using structural equation modeling. The paper seeks to investigate two of the red flags for financial statement fraud identified in Loebbecke et al.'s (1989) paper: client management displays a significant lack of moral fiber and client personnel exhibit strong personality anomalies. As expected, high moral reasoners are more influenced than low moral reasoners by their own attitude towards the behavior. Contrary to prior research, low self-monitors are found to be more influenced than high self-monitors by subjective norms. Future research is recommended to investigate the counter-intuitive results for self-monitors, to consider the implications of group decision making as regards the promulgation of fraudulent financial statements, and to examine additional red flags for financial statement fraud.     

Cross-cultural entrepreneurship research: Current status and framework for future studies

Although cross-cultural research in the field of entrepreneurship is still in its infancy as a research stream, it offers important inferences for both theory and practice. Some have criticized the relative immaturity of previous survey-based studies’ methodology. In order to address this flaw, we analyze existing survey-based studies in the field of cross-cultural entrepreneurship to identify research gaps in content and methodology and then derive the most appropriate analytical approach to fill the gaps for this type of research. Finally, we present a practical framework in which to conduct sound and prudent future studies, integrating the most appropriate analytical approach, general methodological insights, and the particularities of entrepreneurship research in a cross-cultural setting.

When do B2B brands influence the decision making of organizational buyers? An examination of the relationship between purchase risk and brand sensitivity

The dominant perspective on organizational buying behavior suggests that buyers tend to rely on objective criteria when making product choice decisions and that the potential influence of subjective cues, such as brands, on buyer decision making decreases with increasing risk. An alternative perspective, confirmed in this study by in-depth interviews with various managers, suggests that brands serve as a risk-reduction heuristic, whereby the influence of brands on decision making increases as a function of risk. Building on risk and information processing theories, this research builds on these complementary perspectives to propose that risk and brand sensitivity relate in a U-shaped manner, where brand sensitivity is highest in relatively low- or high-risk situations. The results of scenario- and survey-based field studies—involving 206 and 180 members of buying centers, respectively—suggest that both perspectives have merit and support the proposed nonlinear relationship. Moreover, the findings reveal that the risk-brand sensitivity relationship is moderated by competitive intensity, such that the linear (negative) and quadratic (positive) effects are stronger when competitive intensity is low.     

Flexible estimation of price response functions using retail scanner data

Kalyanam and Shively [1998. Estimating irregular pricing effects: a stochastic spline regression approach. Journal of Marketing Research 35 (1), 16–29] and van Heerde et al. [2001. Semiparametric analysis to estimate the deal effect curve. Journal of Marketing Research 38 (2), 197–215] have demonstrated the usefulness of nonparametric regression to estimate pricing effects flexibly. The empirical results of these two studies, however, also revealed that nonparametric regression may suffer from too much flexibility leading to nonmonotonic shapes for price effects. In this paper, we show how the problem of nonmonotonicity can be dealt with without losing the power of flexible estimation techniques. We propose a semiparametric approach based on Bayesian P-splines with monotonicity constraints imposed on own- and cross-price effects. In an empirical application, we illustrate that flexible estimation of own- and cross-price effects can improve the predictive validity of a sales response model substantially, even when price response curves were constrained to show a monotonic shape, as suggested by economic theory. We also discuss the consequences from an unconstrained estimation of price effects.     

Theory-Driven Choice Models

We explore issues in theory-driven choice modeling by focusing on partial-equilibrium models of dynamic structural demand with forward-looking decision-makers, full equilibrium models that integrate the supply side, integration of bounded rationality in dynamic structural models of choice and public policy implications of these models.