The Impact of Price Disclosure on Dynamic Shopping Decisions

A potentially powerful way to assist consumers in making dynamic shopping decisions is to disclose price information to them before they shop, for example by posting prices on the Internet. This paper addresses the differential impact of disclosing either only current, or both current and future prices, on consumer shopping decisions in multi-period tasks involving multiple product purchases. In the context of an Internet-based experiment, we find that consumer expenditure deviates more strongly from that of a normative model when both current and future prices are disclosed than if only current prices are disclosed. We investigate the behavioral effects underlying this finding by estimating a model that allows for variations in consumer discounting, strength of store price format preferences, as well as choice consistency between different price disclosure conditions.     

Food policy and the consumer

This article examines the definition and the content of a “consumeroriented food policy.” Food policy is a balanced government strategy regarding the food economy, which takes account of its interrelationships with both national and international economy. Consumers are more especially concerned with: adequate supplies; fair and stable purchase prices; safety of foodstuffs; nutritionally well-balanced diets; fitness for special requirements; well-defined and satisfying quality, including content rules; unbiased and usable information on foodstuffs and food patterns; participation of consumers in policy-making decisions. The paper focuses on the activities of public authorities, not forgetting the present trend toward deregulation. Examples are mostly taken from the French and EEC contexts.     

Value-based pricing in competitive situations with the help of multi-product price response maps

This article introduces multi-product price response maps for various value pricing applications in competitive situations. The maps are based on the direct elicitation of individual willingness to pay (WTP) as a range for competing products; they reveal an individual's or market's choice probability for a focal product, at its own and competing products' prices. Transforming the price response into profit, revenue, or unit sold maps supports optimal pricing decisions. The maps are also useful for optimizing profit differences from the closest competitor and for portfolio pricing. Managers can use a consumer indecisiveness map, gained from the WTP range data, to devise complementary marketing measures at prices where consumer uncertainty is high. The illustration of this approach uses two empirical examples, featuring two or more competing consumer goods, and demonstrates the predictive and external validity of these proposed maps.     

The forward pricing function of the shipping freight futures market

This article investigates the unbiasedness hypothesis of futures prices in the freight futures market. Being the only market whose underlying asset is a service, it sets it apart from other markets investigated so far in the literature. Cointegration techniques, employed to examine this hypothesis, indicate that futures prices one and two months before maturity are unbiased forecasts of the realized spot prices, whereas a bias exists in the three-months futures prices. This mixed evidence is in agreement with studies in other markets and suggests that the acceptance or rejection of unbiasedness depends on the idiosyncrasies of the market under investigation and on the time to maturity of the contract. Despite the existence of a bias in the three-months prices, futures prices for all maturities are found to provide forecasts of the realized spot prices that are superior to forecasts generated from error correction, ARIMA, exponential smoothing, and random walk models. Hence it appears that users of the BIFFEX market receive accurate signals from the futures prices (regarding the future course of cash prices) and can use the information generated by these prices to guide their physical market decisions. © 1999 John Wiley & Sons, Inc. Jrl Fut Mark 19: 353–376, 1999     

Expectations of Inflation: The Role of Demographic Variables,Expectation Formation,and Financial Literacy

When financial decisions have consequences beyond the immediate future, individuals' economic success may depend on their ability to forecast the rate of inflation. Higher inflation expectations have been reported by individuals who are female, poorer, single and less educated. Our results suggest that these demographic differences in inflation expectations may be partially explained by variations in expectation formation and financial literacy. Specifically, higher inflation expectations were reported by individuals who focused more on how to cover their future expenses and on prices they pay (rather than on the US inflation rate) and by individuals with lower financial literacy.     

Fairness as a Constraint in the Real Estate Market

Community standards, ethical norms, and perceptions of fairness often serve as constraints on pure profit maximizing behavior. Consider the following examples: Most hardware stores refrain from raising prices on snow shovels after a major snow storm, even where short term profits might be increased. Most employers do not lower wages for existing employees, even as unemployment in the area increases. Automobile dealerships rarely raise sticker prices to cope with the long waiting periods for a popular model. Each of these anomalies is consistent with the proposition that firms increase profits subject to fairness constraints.This paper examines perceptions of fairness in the residential real estate industry and explores how community standards affect economic decision-making. The residential real estate industry is unique. One party to the transaction (the landlord) frames decisions as pure business decisions. The other party to the transaction (the tenant) frames decisions more broadly. While a tenant's choice of apartments is in part viewed as a business decision, tenants consider a broad spectrum of non-business issues, as well.This disjunction between landlord and tenant perceptions can lead to unique ethical quandaries and can explain otherwise anomalous economic behavior in the industry. The hypothetical case examined in this paper is based on a frequently encountered situation in the industry. The paper concludes with practical suggestions for managers.     

Innovation Cloning: The Introduction and Performance of Private Label Innovation Copycats

A controversial trend in grocery is the practice by retailers to quickly copy innovative national brands (NBs) launched by manufacturers with their own private label (PL). In a sample of 1,100+ NB pioneers launched in The Netherlands between 2005 and 2009, 11.7% faced a PL copycat by at least one of the seven leading grocery retailers. These copycats obtained an impressive 5.8% category share at the retailer in the year after launch, thereby outperforming the NB pioneers they copy (2.1%) as well as non-copycat PLs launched in the same period (4.4%). Using a two-step selection model, we identify what motivates retailers to copy NB innovations, and what factors drive subsequent copycat performance, thereby taking into account retailers’ innovation assortment decisions. As expected, retailers are more likely to copy successful NB innovations, and these copycats indeed perform well in their stores. However, retailers do not only take into account financial considerations. They are especially hesitant to copy heavily promoted NB innovations and those launched by manufacturers with a strong reputation. To enhance copycat performance, retailers should keep prices of the copycat sufficiently below those of the NB pioneer and limit its promotions. Apart from guiding retailers in their copycat decisions, also NB manufacturers can learn from this study how to discourage retailers from imitating their innovations.     

Manipulation in Conditional Decision Markets

Conditional decision markets concurrently predict the future and decide on it. These markets price the impact of decisions, conditional on them being executed. After the markets close, a principal decides which decisions are executed based on the prices in the markets. As some decisions are not executed, the respective outcome cannot be observed, and the markets predicting the impact of non-executed decisions are void. This allows ex-post costless manipulation of such markets. We conduct two versions of an online experiment to explore scenarios in which a principal runs conditional decision markets to inform her choice among a set of a risky alternatives. We find that the level of manipulation depends on the simplicity of the market setting. When a trader is alone, has the power to move prices far enough, and the decision is deterministically tied to market prices or a very high correlation between prices and decision is implied, only then manipulation occurs. As soon as another trader is present to add risk to manipulation, manipulation is eliminated. Our results contrast theoretical work on conditional decision markets in two ways: First, our results suggest that manipulation may not be as meaningful an issue. Second, probabilistic decision rules are used to add risk to manipulation; when manipulation is not a meaningful issue, deterministic decisions provide the better decision with less noise. To the best of our knowledge, this is the first experimental analysis isolating the effects of the conditional nature of decision markets.     

Multi-stage purchase decision models: Accommodating response heterogeneity, common demand shocks, and endogeneity using disaggregate data

The most comprehensive models of purchase behavior for frequently purchased supermarket items explain households' purchase incidence decisions (whether to buy), brand choice decisions (what to buy), and purchase quantity decisions (how much to buy). In this study, we develop a three-stage purchase incidence/brand choice/purchase quantity model for household-level data in which all three stages are specified with (i) random coefficient distributions for model covariates and (ii) random effect distributions to account for unobserved factors affecting demand (known as common demand shocks), while also (iii) controlling for the effects of endogeneity on prices. Compared to current state-of-the-art models for multi-stage purchase decisions, the results show improvements in fit and forecasting accuracy when purchase behaviors are modeled with all of these components in combination. Perhaps more importantly, when common demand shocks are ignored, substantial differences in parameter estimates and diagnostic information about consumer behavior are likely (median differences in parameter estimates are 10% and 20% in two product categories), which impact managerial deliberations about price and promotion policies. Further, failure to account for common demand shocks affects the mean and variance of random coefficient distributions in unpredictable directions, which could produce results that encourage managers to pursue inappropriate and costly micro-level product marketing strategies.     

The BizCafe Interpretive Simulation case study to teach strategic entrepreneurship

The BizCafe Interpretive Simulation is a good resource for teaching a restaurant business start-up. The simulation replicates the real life business of running a coffee shop. Each student will assume the role of coffee shop manager, and will make all the decisions necessary to survive in a competitive environment. The decisions encompass several aspects of the restaurant business. In the start-up period, determining the hours of operation, coffee prices, and wages are among the decisions. As in real life, some of the decisions—like whether or not to buy a pastry oven—are irreversible, with ramifications that will impact revenues and costs throughout the duration of the simulation. However, coffee prices and wages can be changed, based on analysis of the competitive set. As in any business venture, this is a contest to see who can survive. In this competitive set, there will be winners and losers, based on who has made the best decisions.     

Understanding consumers’ decisions to adopt technology-enabled transformative services

This study extends understanding of consumers' decisions to adopt transformative services delivered via technology. It incorporates competitive effects into the model of goal-directed behavior which, in keeping with the majority of consumer decision making models, neglects to explicitly account for competition. A goal-level operationalization of competition, incorporating both direct and indirect competition, is proposed. A national web-based survey collected data from 431 respondents about their decisions to adopt mental health services delivered via mobile phone. The findings show that the extent to which consumers perceived using these transformative services to be more instrumental to achieving their goals than competition had the greatest impact on their adoption decisions. This finding builds on the limited empirical evidence for the inclusion of competitive effects to more fully explain consumers' decisions to adopt technology-based and other services. It also provides support for a broader operationalization of competition with respect to consumers' personal goals.     

Threats to monetary policy independence: reasons to be concerned

Several legislative efforts are under way that aim to impose greater congressional oversight of and influence on the monetary policy decision making of the Federal Reserve System. Some of these initiatives might do little harm or even make marginal improvements. But others pose more serious threats to the operational independence of monetary policy. Proposals to require the Federal Reserve to frame monetary policy decisions according to a mathematical formula imply a concrete simplicity of policy that is inaccurate and misleading. And the reporting requirements associated with these proposals threaten to negate the major advantage of monetary policy as a countercyclical weapon—speed. Proposals to subject the non-monetary policy functions of the Fed to the appropriations process provide Congress with additional leverage that could be used to apply pressure to monetary policy decisions. For its part, the Fed should continue to increase transparency through more timely and complete release of relevant information and analysis. To best promote the objectives of stable prices and maximum employment, the operational independence of the Federal Reserve’s monetary policy decision making needs to be preserved and protected.     

Profiling the reference price consumer

Researchers in marketing have devoted considerable attention to understanding how price impacts the purchase decision. Some individuals, termed memory-based reference price (MBR) consumers, take into account price expectations developed from past purchase behavior when making a current choice. Other individuals, termed stimulus-based reference price (SBR) consumers, make choices by constructing a reference point from the currently observed distribution of prices. Using a latent class model of structural heterogeneity applied to purchase histories from the toilet tissue category, we classify households in terms of the pricing mechanism used in buying decisions. We find strong evidence that memory-based (internal) reference price consumers are more price sensitive than other consumers. Moreover, we find that variables associated with the accessibility of price information are predictive of consumer use of memory-based reference prices. Managerial implications of these results are discussed.     

药品价格乱象的深度剖析

药品虚高定价究竟如何形成?虚高定价所形成的巨额利润究竟流向了何方?虚高定价究竟吞噬了谁的利益?为什么国家的调控措施不断推出却收效甚微呢?究竟怎样才能管住药品的虚高定价呢?这一系列问题都是老百姓和监管者十分关心的问题。部分医疗机构及具有处方权医生的贪婪是万恶之源、监管者和中间商为了结伙分利而为虎作伥并推波助澜、药品生产企业为了生存主动或被动地予以全力配合,这就是演绎高药价闹剧的主线。要根治药品虚高定价,就得管住两头、整治中间,多管齐下。     

The Effect of National Culture on Whistle-Blowing Perceptions

Society continues to be concerned about the impact of ethics on decision making. While many researchers have focused on this issue, the increased globalization of today's business suggests that more emphasis should be given to the potential impact of culture on ethical decisions. The current study is based, in part, on the work of Hofstede (1980, 1991) who identified multiple dimensions on which countries differ in terms of culture. As such, it gives consideration to the impact of national culture on ethical decision making. The study focuses on ethical decisions made by U.S. and Taiwanese accounting students and examines cross-cultural differences in business-related ethical perceptions. Results indicated significant differences between the ethical perspectives and judgments of U.S. and Taiwanese accounting students in a whistle-blowing scenario, particularly with respect to Hofstede's individualism dimension. These findings enhance our understanding of cross-cultural ethical differences. The implications of these results are discussed and suggested areas for future research are proposed.     

Measuring the effect of the zero lower bound on yields and exchange rates in the U.K. and Germany

The zero lower bound on nominal interest rates began to constrain many central banks' setting of short-term interest rates in late 2008 or early 2009. According to standard macroeconomic models, this should have greatly reduced the effectiveness of monetary policy and increased the efficacy of fiscal policy. However, these models also imply that asset prices and private-sector decisions depend on the entire path of expected future short-term interest rates, not just the current level of the monetary policy rate. Thus, interest rates with a year or more to maturity are arguably more relevant for asset prices and the economy, and it is unclear to what extent those yields have been affected by the zero lower bound. In this paper, we apply the methods of Swanson and Williams (2013) to medium- and longer-term yields and exchange rates in the U.K. and Germany. In particular, we compare the sensitivity of these rates to macroeconomic news during periods when short-term interest rates were very low to that during normal times. We find that: 1) USD/GBP and USD/EUR exchange rates have been essentially unaffected by the zero lower bound, 2) yields on German bunds were essentially unconstrained by the zero bound until late 2012, and 3) yields on U.K. gilts were substantially constrained by the zero lower bound in 2009 and 2012, but were surprisingly responsive to news in 2010–11. We compare these findings to the U.S. and discuss their broader implications.     

The Effect of Truckload Driver Turnover on Truckload Freight Pricing

High rates of truck driver turnover have long plagued the full truckload (TL) sector. While greater driver turnover raises TL carriers’ costs, no research has examined how changes in industry-wide TL driver turnover rates affect industry-wide prices shippers pay for TL transportation. Drawing on economic theory regarding firms’ asymmetric adjustment of prices in response to changing costs, we explain why increases in driver turnover are expected to increase the prices carriers charge for their services, whereas decreases in driver turnover are expected to have limited effect on the prices carriers charge for their services. We further explain why the positive impact of increases in industry-wide TL driver turnover rates on prices will be more pronounced when industry employment is rising more rapidly. To test our theory, we assemble a time series data set combining proprietary driver turnover data with publicly available data regarding TL pricing, trucking employment, diesel prices, and aggregate industry activity. Results from fitting a set of time series econometric models corroborate our theorized predictions. We explain the implications of these findings for theory and practice.     

稳定农产品价格的理性思考

农产品价格上涨关系国计民生。导致农产品价格上涨的原因是多方面的,既有通货膨胀的压力、生产成本的提高,也有游资炒作的因素。农产品价格的快速上涨对下游产业、消费者乃至宏观经济都会造成伤害。稳定农产品价格应采取以下措施：强化农产品价格监控的力度;发展现代农业,提高农业综合生产能力;完善农产品储备体系;完善农产品期货市场;降低农产品流通成本。     

U.S. Workers Delaying Retirement: Who and Why and Implications for Businesses

One of the main trends in the labor market in recent years is the aging of the workforce, which partly results from older workers delaying retirement. Using the Current Population Survey from the Bureau of Labor Statistics, we find that the trend of delaying retirement began as early as the mid-1990s, accelerated since the beginning of the latest recession, and has continued into the first four months of 2011. We also find that the development of this trend varied significantly across socioeconomic groups, industries, and occupations. We then use The Conference Board Consumer Confidence Survey to measure the impact of home prices and labor market conditions on retirement decisions, and find that workers in households that experienced labor loss/compensation cuts and significant declines in home prices were more likely to plan to delay retirement. These results also indicate that workers from states that suffered from large declines in home prices and high unemployment are more likely to delay retirement. We conclude by discussing potential economic and business implications.