EVOLUTION IN IMPERFECT COMMITMENT BARGAINING—STRATEGIC VERSUS IGNORANT TYPES

To commit in bargaining is crucial: in the ultimatum game with its one‐sided commitment power the ‘proposer’ (almost) receives the whole pie while the ‘responder’ is left with (almost) nothing. When bargaining parties commit simultaneously the symmetric Nash (Econometrica, 1950, vol. 18, pp. 155–162) bargaining solution predicts equal shares. Continuously connecting these two games yields a one‐parameter family of games ( Fischer et al. , Experimental Economics, 2006, vol. 9, pp. 17–33) for which we distinguish two behavioral dispositions, namely (1) neglecting commitment power and (2) reacting to it strategically. Their pay‐off implications define the evolutionary set‐up for which we derive the evolutionarily stable behavioral disposition. Our analysis sheds light on the hypothesis that in experiments participants neglect strategic aspects such as commitment power.     

Rule-Inequality-Aversion Preference and Conditional Cooperation in Public Goods Experiments: Economic Experiment Evidence from China

We provide an experimental investigation of the fair rule preference and its effect on anonymous cooperation, intending to test the hypothesis that people who exhibit high degrees of rule inequality aversion—consider “equality and mutual obligation under the social contract” as justified, are disgusted with free-rider behavior in the public goods game and are more likely to be conditional cooperators and make conditional contributions. Based on experimental work related to rule-preferences Chlaß and Moffatt (Giving in dictator games: experimenter demand effect or preference over the rules of the game? (No. 2012, 044). Jena Economic Research Papers, 2012) and the public goods game Fischbacher et al. (Am Econ Rev 100(1):541–556, 2010), we designed a dictator game with the option of buying a veto (when the veto was purchased, the level of rule inequality decreased, making it an ultimatum game) to measure rule preference, i.e., rule inequality aversion, and conducted a two-stage public goods experiment to identify the cooperation preferences and repeated cooperation levels of participants. We investigated the relationship between rule preferences and cooperative preferences (conditional reciprocal preference) and tried to explain the adjustments people made when making repeated contributions of public goods (conditional cooperation behavior) from a rule preference perspective. The results show that: (1) Heterogeneous rule-inequality-aversion preferences are found in lab; (2) The stronger the rule-inequality-aversion preference is, the higher the probability is for the individual to become a conditional cooperator in public goods experiment; (3) Individuals who have stronger rule-inequality-aversion are more sensitive to the contributions that are deviated from the norm. Compared to the theory of conditional cooperation types, rule-inequality-aversion preference has a better explanation power when it comes to the behavior adjustment in repeated public goods contribution.     

The (Negligible) Benefit of Moving First: Efficiency and Equity in Principal-Agent Negotiations

Like the first-mover in an ultimatum game, the principal is a first-mover with foreknowledge of the agent’s “rational” best response function. The solution to the “principal’s problem” is to choose a contract that maximizes the principal’s expected profit given the agent’s marginal efficacy and marginal effort cost. However, this paper reports experiments that show that principals make large concessions toward an equal division outcome. As in ultimatum games, agents are at times willing to punish principals who are perceived as being overly acquisitive. Variations in agent effort cost and effectiveness that should (theoretically) produce qualitatively different game-theoretic equilibria have little impact on outcomes.     

Optimal tariffs on exhaustible resources

We characterize the Markov perfect equilibria of two games in which oligopsonistic importers of an exhaustible resource confront competitive suppliers who have rational expectations. The games differ only in the timing of moves, or the speed with which participants can adjust their plans. The optimal tariff when sellers move first (are less flexible) differs considerably from that in which buyers move first, and sellers retain more control over intertemporal arbitrage opportunities. If the initial stock is small, buyers suffer a disadvantage from being the first-mover; this is reversed if the stock is large.     

Goodwill and dynamic advertising strategies

In this paper, we empirically analyze weekly advertising policies of manufacturing firms in consumer goods markets. We assume firms engage in persuasive advertising, thus policies of firms affect the goodwill of a brand. We introduce a demand and a goodwill production function. A simple transformation of the demand function allows us to identify not only the demand parameters but also the parameters of the goodwill production function. We reconstruct the unobserved goodwill levels using these parameters and past advertising levels. We restrict our attention to Markov Perfect Equilibrium (MPE) strategies which are functions of payoff relevant state variables. Without imposing further restrictions on the dynamic competitive environment, we investigate the relationship between observed advertising strategies—which are assumed to be MPE—and payoff relevant state variables by means of several reduced form specifications. The most important determinant of advertising intensity turns out to be goodwill. We demonstrate that controlling for an advertising campaign significantly improves the explanatory power of the model. JEL Classification L13 . C73 . M30 . M37 I would like to thank Volkswagen Stiftung for the generous financial support which made this research possible.     

Does the devil wear Prada? Luxury product experiences can affect prosocial behavior

Despite the explosive growth of luxury consumption, researchers have yet to examine how the experience of using luxury products affects us both psychologically and behaviorally. In this research, we explore how the experience of using a luxury product can alter a user's perceptions of themselves and their behavior toward other people. We gave women either a luxury product (e.g., Prada handbag) or a non-luxury product (e.g., unbranded handbag) to use, and afterwards, we presented women with opportunities to exhibit either selfish or generous behaviors toward others. We found that, after using a luxury product, women exhibited more selfish behavior, such as sharing fewer resources with others and contributing less money to charity than women who used a non-luxury handbag. We also found this pattern can be reversed, with luxury users exhibiting more generous behavior when the generous behavior can be performed in front of other people. Further, we show that these patterns of selfish and generous behaviors are mediated by changes in perceived status and superiority that are triggered when women experience using a luxury product.     

Justifications and Questions in Detecting Deception

Truth-tellers and deceivers use justifications to bolster their credibility, but given their different motivations, truth-tellers and deceivers may use justifications differently. Participants were assigned the role of allocator or recipient in an ultimatum game. Allocators received money based on their performance on a task and made an offer. Recipients did not have information about allocator’s task performance or amount the allocator received, and therefore, allocators could deceive. Liars provided more plausible details to support their offer by stating the structure of their task; this strategy backfired and led to more detection of lies. Truth-tellers were more likely to disclose advantageous information about their endowment of money in their justifications, and this reduced suspicion in their offers. Deceivers used more wrap-up questions to end the interaction; this did not help reduce partner suspicion. Asking questions in general did not improve detection accuracy.     

Ethics and Economics in International Business Education: A Comparison of Kuwaiti and U.S. Students Using an Ultimatum Game Scenario

In the past 20 years a body of research in behavioral and experimental economics has challenged classical economic theory. Yet, this body of research seems relatively unknown in business education. One behavioral test with implications for international business education has been the use of ultimatum games, which has more recently expanded to cross-cultural studies. Yet, virtually no cross-cultural studies have been conducted for subjects in Middle Eastern countries. One of the central findings from ultimatum game research and other variations is that individuals place a high value on fairness in transactions, a fundamentally ethical concept. This article reports a preliminary study of Kuwaiti and U.S. business students. Results are consistent with previous studies, showing Kuwaiti subjects to be in line with subjects from developed economies. Discussion includes the implications for management and business educators.     

The Role of Distribution Channel Agents in Promoting Innovative Activity in Small Retail Businesses: A Case-Study of IT Adoption

The successful application of information technology (IT) offers the retailer, large or small, a decisive source of competitive advantage. Smaller retailers, however, have generally been slow to embrace the new technologies of sales data capture, analysis and communication. Within the distribution channel, four intermediary agents - wholesalers, trade associations, voluntary groups and franchisors - are well-placed to encourage more widespread take-up of IT among small retailers. The role of each agent is examined through the presentation of survey-derived information, and it is suggested that none of these agents has exploited widely this potential to promote innovation adoption. However, the presence of identifiable geographical and organisational clusters of small retailers using IT illustrates the important role being played by some of these agents in promoting IT adoption and indicates ways in which many others could encourage innovative activity.     

Informed Consent Out of Context

Several attempts have been made to transfer the concept of informed consent from medical and research ethics to dealing with affected groups in other areas such as engineering, land use planning, and business management. It is argued that these attempts are unsuccessful since the concept of informed consent is inadequate for situations in which groups of affected persons are dealt with collectively (rather than individually, as in clinical medicine). There are several reasons for this. The affected groups from which informed consent is sought cannot be identified with sufficient precision. Informed consent is associated with individual veto power, but it does not appear realistic to give veto power to all individuals who are affected for instance by an engineering project. Most importantly, the concept of informed consent puts focus on the public’s acceptance of ready-made proposals rather than on its participation in the decision-making process as a whole, which includes the development of alternatives for the decision. Therefore, the concept of informed consent is not applicable to a company’s relations with groups and collectives. It may, however, be applicable to a company’s relations with individual persons such as customers and employees.     

Estimating cannibalizing effects of sales promotions: The impact of price cuts and store type

To evaluate the financial impact of supermarket sales promotions, managers must estimate how much new demand comes from cannibalizing the base product compared with other sources. However, investigations into cannibalization are scant. Using vector autoregression analytical framework applied to three years of supermarket scanner data, and sales promotions for pound cake, we estimate cannibalization effects for two common price reductions (10% and 15%), across large, medium and small supermarkets. The sales bumps varied across supermarkets for each price cut while cannibalization effects were substantial only in large supermarkets, with moderate effects in medium stores and no effects in small supermarkets.     

Increasing customer purchase intention through product return policies: The pivotal impacts of retailer brand familiarity and product categories

This study gauges customer perspectives to investigate how return policy generosity (the degree to which a retailer imposes minimal restrictions on returns) influences customer-perceived value and customer purchase intention. It also examines two moderators, retailer brand familiarity (the extent to which the retailer brand is well-known) and product categories (the difference between products with respect to the magnitude of effort required to make a return). An experiment with a 2 × 2 × 2 factorial design was conducted. The results show that return policy generosity increases customer purchase intention by enhancing the perceived value of the policy. Lesser-known retailers benefit more from generous return policies than their well-known competitors, particularly when a product requires significant return effort. Well-known retailers benefit from offering generous return policies only for product categories that involve low levels of return effort. The findings of this study suggest that if a retailer formulates a return policy without considering the moderating effects of retailer brand familiarity and product category, then it will tend to over-invest if the return policy is generous.     

I Expected More from You: The Influence of Close Relationships and Perspective Taking on Negotiation Offers

Three experimental studies show that interpersonal relationships influence the expectations of negotiators at the negotiation table. That is, negotiators expect more generous negotiation offers from close others (Study 1), and when expectations are not met, negative emotions arise, resulting in negative economic and relational outcomes (Study 2). Finally, a boundary condition for the effect of interpersonal relationships on negotiation expectations is shown: perspective taking leads the parties to expect less from friends than from acquaintances (Study 3). The findings suggest that perspective taking helps negotiators reach agreement in relationships. The article concludes with implications for practice and future research directions.     

Asymptotically Optimal Importance Sampling and Stratification for Pricing Path-Dependent Options

This paper develops a variance reduction technique for Monte Carlo simulations of path-dependent options driven by high-dimensional Gaussian vectors. The method combines importance sampling based on a change of drift with stratified sampling along a small number of key dimensions. The change of drift is selected through a large deviations analysis and is shown to be optimal in an asymptotic sense. The drift selected has an interpretation as the path of the underlying state variables which maximizes the product of probability and payoff—the most important path. The directions used for stratified sampling are optimal for a quadratic approximation to the integrand or payoff function. Indeed, under differentiability assumptions our importance sampling method eliminates variability due to the linear part of the payoff function, and stratification eliminates much of the variability due to the quadratic part of the payoff. The two parts of the method are linked because the asymptotically optimal drift vector frequently provides a particularly effective direction for stratification. We illustrate the use of the method with path-dependent options, a stochastic volatility model, and interest rate derivatives. The method reveals novel features of the structure of their payoffs.     

Brand placements in video games: How local in-game experiences influence brand attitudes

Brand placements are omnipresent in video games, but their overall effect on brand attitudes is small and varies substantially between studies. The present research takes an evaluative conditioning perspective to explain when and how brand placements in video games influence brand attitudes. In two experiments with a 3D first-person video game, we show that only brands encountered during positive in-game experiences benefit from the placement, but not those encountered during negative in-game experiences. Building on the cognitive processes underlying evaluative conditioning, we also show that brand attitudes largely depend on the memory for the pairing of a brand with positive/negative in-game experiences. Pairing memory and thus also evaluative conditioning effects increase when players attend to the pairing of brands and positive/negative experiences, for example, when such pairings are a central part of the game's storyline. Overall, our findings show that evaluative conditioning and its cognitive mechanisms can be utilized to explain and predict advertising effects in applied settings, such as brand placements in video games.     

网游出海

随着全球互联网的发展壮大,网络游戏行业对市场的开拓步伐也已经进入了世界范围。虽然中国的网络游戏起步晚,一直被认为处于“跟随者”的地位,但智慧的中国网游运营商早在2003年就已经开始向世界市场输出原创的网游产品,并在7年内保持了接近20％的年复合增长率。经过多年的积累,我国网游已经在东南亚地区占据了较高的市场份额,相信通过行业的不断拓展以及产品性能的持续提升,行业出口的步伐将不断加快,中国原创网络游戏也必将出现世界认可的知名产品。     

"Bet You Can't Eat Just one"-

Household and food store manager perceptions of the acceptance of four means of reducing the incidence and severity of food safety hazards were estimated using a mail survey in early 1992. Households gave limited acceptance to use of vacuum packaging, irradiation, organic production and pesticide-free production as means of reducing food safety hazards. Education of the household head was the only socioeconomic characteristic statistically impacting household acceptance of these four activities. Store manager perceptions of their customers' reactions to these procedures were statistically less favorable than those of the households.     

Positive affect moderates the impact of assortment size on choice satisfaction

The present research proposes that positive affect mitigates choice overload. Results from four studies show that whereas people in neutral affect feel less satisfied when choosing from a large relative to a small assortment, people in positive affect do not experience a decline in satisfaction and may even feel more satisfied when choosing from a large, relative to a small assortment. It is proposed that positive affect has these effects by shifting people's attention from the difficulty of the choice task to the quality of the assortment, as a basis for judgment of choice satisfaction.