The interrelationships between brand and channel choice

We propose a framework for the joint study of the consumer’s decision of where to buy and what to buy. The framework is rooted in utility theory where the utility is for a particular channel/brand combination. The framework contains firm actions, the consumer search process, the choice process, and consumer learning. We develop research questions within each of these areas. We then discuss methodological issues pertaining to the use of experimentation and econometrics. Our framework suggests that brand and channel choices are closely intertwined, and therefore studying them jointly will reveal a deeper understanding of consumer decision making in the modern marketing environment.     

Europe – Quo Vadis? Reflections on the Future Institutional Framework of the European Union

With twelve new members the decision making in the European Union via intergovernmental cooperation will become ineffective. The EU is at the Cross Roads. In order to avoid a Stagno‐Europe the EU has a choice: Either it looks for the very essentials in the common institutional framework and adjusts it accordingly or the member states agree in ceding national sovereignty to the European level. This, however, requires that the democratic deficit at the EU level is reduced. The Treaty of Nice has failed to solve these issues. The paper elaborates in detail the non‐essentials and the essentials of European integration and discusses the basics of an approach to a constitution‐like arrangement for Europe.     

Adjusting Choice Models to Better Predict Market Behavior

The emergence of Bayesian methodology has facilitated respondent-level conjoint models, and deriving utilities from choice experiments has become very popular among those modeling product line decisions or new product introductions. This review begins with a paradox of why experimental choices should mirror market behavior despite clear differences in content, structure and motivation. It then addresses ways to design the choice tasks so that they are more likely to reflect market choices. Finally, it examines ways to model the results of the choice experiments to better mirror both underlying decision processes and potential market choices. Co-chairs. Author order is alphabetical.     

Multiple-Category Decision-Making: Review and Synthesis

In many purchase environments, consumers use information from a number of product categories prior to making a decision. These purchase situations create dependencies in choice outcomes across categories. As such, these decision problems cannot be easily modeled using the single-category, single-choice paradigm commonly used by researchers in marketing. We outline a conceptual framework for categorization, and then discuss three types of cross-category dependence: cross-category consideration cross-category learning, and product bundling. We argue that the key to modeling choice dependence across categories is knowledge of the goals driving consumer behavior.     

Process and context in choice models

We develop a general framework that extends choice models by including an explicit representation of the process and context of decision making. Process refers to the steps involved in decision making. Context refers to factors affecting the process, focusing in this paper on social networks. The extended choice framework includes more behavioral richness through the explicit representation of the planning process preceding an action and its dynamics and the effects of context (family, friends, and market) on the process leading to a choice, as well as the inclusion of new types of subjective data in choice models. We discuss the key issues involved in applying the extended framework, focusing on richer data requirements, theories, and models, and present three partial demonstrations of the proposed framework. Future research challenges include the development of more comprehensive empirical tests of the extended modeling framework.     

On Consensus of Group Decision Making with Interval Utility Values and Interval Preference Orderings

Uncertainty is a common phenomenon in our real world. Interval utility values and interval preference orderings are two of the simplest and most convenient tools to describe uncertain preferences in decision making. In this paper, we investigate consensus problems in group decision making with interval utility values and interval preference orderings. We first establish their transformation relations, and give a formula for calculating the association coefficients of individual uncertain preferences and group ones. We then develop a consensus procedure for group decision making with interval utility values and interval preference orderings, which takes interval utility values as the uniform preference representation. This procedure can be reduced to a series of processes for dealing with some special group decision making situations, such as: group decision making with utility values and preference orderings, group decision making with interval utility values, group decision making with interval preference orderings, etc. Finally, we illustrate the applications of the developed procedures with two practical examples.     

Generalized Ordered Weighted Reference Dependent Utility Aggregation Operators and Their Applications to Group Decision-Making

To quantify the influence of decision makers’ psychological factors on the group decision process, this paper develops a new class of aggregation operators based on reference-dependent utility functions (RUs) in multi-attribute group decision analysis. RUs include S-shaped RU and non-S-shaped RU. Each RU affords a framework where the psychological factors explicitly enter the decision problem via the basic utility function, reference point and loss aversion coefficient. Under the general framework, we derive a generalized ordered weighted S-shaped RU proportional averaging (GOSP) operator and a generalized ordered weighted non-S-shaped RU proportional averaging (GONSP) operator, respectively. The GOSP operator implies the risk attitude of the DM for relative losses is risk-seeking, while GONSP operator indicates the risk attitude in this case is risk-averse. As a special case, GONSP operator can degenerate into GOWPA operator which means that the attitude of the DM is risk-neutral. Each operator satisfies the desirable properties of general operator, i.e., monotonicity, commutativity, idempotency and boundedness. Furthermore, we consider hyperbolic absolute risk aversion (HARA) function as the basic utility function, and define an S-shaped HARA and a non-S-shaped HARA utility functions. Based on the two new RUs, we propose GOSP–HARA operator and GONSP–HARA operator. Every operator covers many existing aggregation operators. To ascertain weights of such operators, the paper builds an attribute-deviation weight model and a DMs-deviation weight model. Based on these RU operators and weight models, an approach is addressed for solving multiple attribute group decision-making problem. At last, an example is provided to show the feasible of our approach.     

Feature-based attributes and the roles of consumers' perception bias and inference in choice

This paper considers decision contexts wherein consumers make choices among alternatives that contain a manifest feature-based attribute: i.e., a discrete, salient and important attribute that describes a dichotomous quality, such as “genetically modified”, “organic”, or “locally grown”. We propose a choice model that can explicitly account for a) perception bias with respect to such an attribute when its information is present, and b) inference formation if this attribute information is missing for some alternatives. The impact of different information presentation formats on consumers' perception bias and inference formation is then examined by applying theories from social psychology. Our model outperforms standard Random Utility models that omit explicit representation of these phenomena. Consistent with theories considered, we find significant evidence of perception bias and inference in the choice data. Our results also provide insights on how consumers may infer the quality of a missing attribute in different competitive framing contexts. Finally, our welfare estimates show that consumers may benefit simply from the information improvement regarding government labeling policies.     

Europe — A pioneer in greenhouse gas emissions trading

The decision on the EU directive for emissions trading in June 2003 makes Europe a pioneer in the large-scale application of market instruments to climate policy. This development would have been unthinkable five years ago. The negotiations provide a textbook example of public choice theory in practice. We describe the crucial points of the recent and upcoming legislation process at the levels of the EU and the Member States, the latter with a focus on Germany. The timetable for the enforcement of the emissions trading directive at the national level seems very tight—especially when considering the likely manoeuvres by several stakeholder groups.     

Regulatory competition between company laws in the European Union: The Überseering case

The strengthening of choice of law in the field of company law by the recent decision of the European Court of Justice in the Überseering case may lead in the near future to the mutual recognition of national business forms by the EU Member States. This will mean an increase in regulatory competition between company laws. But will this competition necessarily lead to an improvement in the quality of company laws, or could the opposite be the case? What would be the appropriate features of a regulatory framework that would guide a competitive race of company laws to the top and not to the bottom?     

企业成长的一个悖论分析:效率与适应

企业是追求效率机制的经济实体,在成长过程中有维持内部稳定的内生性倾向。这种固有倾向使得企业在长期发展中面临着能力僵化,无法适应环境变化的危险。因此,企业在追求效率和追求长期适应能力上有着一个尴尬境地,产生了企业成长的一个悖论。为解开这个悖论,把企业家精神、网络联盟和柔性组织结构放入考虑的框架内,从而找到解决的方法。     

The Role of Decision Importance and the Salience of Alternatives in Determining the Consistency between Consumers' Attitudes and Decisions

This research examines how the importance of a consumer decision influences attitude-decision consistency and choice in decision contexts that contain versus do not contain specified alternatives. Results demonstrate that decision importance moderates attitude-decision consistency when alternatives are not specified, but not when alternatives are specified. These results, in conjunction with the time participants devote to choice, suggest that importance plays a larger role in attitude-decision consistency when alternatives are unspecified versus specified because importance leads to greater effort in generation of alternatives when alternatives are unspecified (an unnecessary task when alternatives are specified in context). Implications for promotion are discussed.     

RISK-AVERSION BEHAVIOR IN CONSUMPTION/INVESTMENT PROBLEMS1

In this paper, we study the risk-aversion behavior of an agent in the dynamic framework of consumption/investment decision making that allows the possibility of bankruptcy. Agent's consumption utility is assumed to be represented by a strictly increasing, strictly concave, continuously differentiable function in the general case and by a HARA-type function in the special case treated in the paper. Coefficients of absolute and relative risk aversion are defined to be the well-known curvature measures associated with the derived utility of wealth obtained as the value function of the agent's optimization problem. Through an analysis of these coefficients, we show how the change in agent's risk aversion as his wealth changes depends on his consumption utility and the other problem parameters, including the payment at bankruptcy. Moreover, in the HARA case, we can conclude that the agent's relative risk aversion is nondecreasing with wealth, while his absolute risk aversion is decreasing with wealth only if he is sufficiently wealthy. At lower wealth levels, however, the agent's absolute risk aversion may increase with wealth in some cases.     

European Union Import Quotas on Chinese Textile and Clothing Exports in 2005: A Panic-Driven Commission or Rational Explanations?

Based upon a narrative policy analysis, the aim of this paper is to answer two questions: (1) Why did the EU re-introduce import quotas on Chinese textile and clothing exports in 2005 after promising to lift them? (2) Why did the EU (partly) abolish these quotas a couple of months later? The rational choice inspired model put forward in this paper assumes that the EU’s political system is a partial asymmetrical political equilibrium in which decisions taken by decision makers are a product of a supply and demand. By using this model, it is explained how the lifting of quotas on Chinese textile and clothing exports to WTO members on 1 January, 2005 and the political situation surrounding the French referendum on the Constitutional Treaty on 29 May, 2005, constitute key events in the decision making process.     

Legal But Costly: An Analysis of the EU GM Regulation in the Light of the WTO Trade Dispute Between the EU and the USA

In this study, we investigate the new European Union (EU) regulations in the light of the ruling by the World Trade Organization (WTO) panel on the trade in genetically modified crops. To this end, we describe: the basic differences in approaches between the EU and the complaining parties with regard to genetically modified crops, what the main arguments were of the complaining parties as well as the defence of the EU, what the final judgement of the panel was and finally, we describe the current EU regulations. We then analyse to what extent, the arguments and conclusions of the panel still hold regarding the new EU legislation. We find that parts of the current EU legislation, that is, the safety bans as they are currently in place, are in breach of the WTO commitments. Moreover, the new approval procedures have the potential to also break these rules, although whether or not they will, depends on how the European Commission acts. Whether or not the EU will be challenged at the WTO remains an open question, as the decision to fight before the WTO may be more costly than working out new bilateral trade agreements.     

Entrepreneurship as a utility maximizing response

Research on entrepreneurship has investigated what entrepreneurs do, what happens when they act as entrepreneurs, and why they act as entrepreneurs. This paper contributes to the latter investigation, and specifically asks why some people choose to be entrepreneurs, while others choose to be employees. Responding to prior literature recognizing the lack of a coherent theory of entrepreneurship and calling for a rigorous examination of the decision to become an entrepreneur, this paper presents an economic model of the career decision. We postulate that the individual chooses an entrepreneurial career path, or a career as an employee, or some combination of the two, according to which career path promises maximal utility (or psychic satisfaction).We assume that the individual's utility from any particular occupation, whether self-employed or employed, depends on income (which depends in turn on ability), as well as working conditions such as decision-making control, risk exposure, work effort required, and other working conditions (net perquisites) associated with that occupation. Individuals will exhibit either preference or aversion towards each of the specified working conditions, and it is the degree of that preference or aversion, in conjunction with the quantum of each working condition, which determines the total utility that the individual will derive from each particular occupation.We show that all employees will have an incentive to be self-employed (if they could assemble the same resources as their employer). Also, the greater their managerial and entrepreneurial ability, the greater will be their incentive to be self-employed, other things being equal. Next, we show that a more positive attitude to work (i.e., a lesser aversion to work effort required) provides a greater incentive to be self-employed.The individual's degree of risk aversion also influences the choice to be an entrepreneur. The more tolerant one is of risk bearing, the greater the incentive to be self-employed. Similarly, the greater the preference for independence, or decision-making control, the greater the incentive to be self-employed. Finally, it is noted that perquisites (and avoidance of irksome elements) can potentially be controlled to a greater degree when self-employed, so the individual will consider the differences in these other working conditions when contemplating a career choice.But it is the sum of the utility and disutility from these sources which determines the career decision. Thus, we demonstrate that positive attitudes toward risk, work, and independence are neither necessary nor sufficient conditions for a person to want to be an entrepreneur. Entrepreneurial abilities and attitudes are desirable in employment situations, therefore, an employer may choose to bribe an entrepreneurial individual to be an employee by offering more income and greater independence, for example.We demonstrate that firms recruiting employees, or venture capitalists considering funding an entrepreneur, should in their own best interests investigate the person's attitudes toward income, risk, work, and independence as well as their abilities, as these attitudes underpin the person's worth as an employee and their incentive to be self-employed. Management educators should design programs which enhance the entrepreneurial abilities and attitudes of individuals, and the individuals themselves should consider their `attitudinal' make-up before committing to entrepreneurship.     

Shopping context and consumers’ mental representation of complex shopping trip decision problems

Depending on the shopping context, consumers may develop different mental representations of complex shopping trip decision problems to help them interpret the decision situation that they face and evaluate alternative courses of action. To investigate these mental representations and how they vary across contexts, the authors propose a causal network structure that allows for a formal representation of how context-specific benefits requirements affect consumers’ evaluation of decision alternative attributes. They empirically test hypotheses derived from the framework, using data on consumers’ mental representations of a complex shopping trip decision problem across four shopping contexts that differ in terms of opening hour restrictions and shopping purpose, and find support for the proposed structure and hypotheses.     

Immigrant social networks and foreign entry: Australia and New Zealand firms in the European Union and Greater China

Based on social networking and ethnic networking theories, this paper presents a theoretical framework that hypothesizes the linkages between immigrant social networks and foreign market entry (FME) strategies for firms operating in the European Union (EU) and Greater China (GC) region. “Immigrant effect” (IE) is used as a proxy for immigrant social networks. IE refers to firms that are owned and/or hired immigrants in key decision-making positions to manage and/or market their products/services in the immigrant's country of origin (COO). The findings of this study reveal that immigrants do play a pivotal role in affecting the choice of FME mode into their respective COO in both EU and GC regions. As such, firms could employ a standardized IE–FME framework across the EU and GC regions. However, the antecedents for choosing an IE are different for both regions, thus suggesting that a different antecedent-IE framework for the EU and the GC regions. The results suggest that both standardized and adapted approaches should be considered when formulating the antecedent-IE–FME framework for the EU and GC regions. The findings of this study has theoretical implications for research pertaining to social network/ethnic network and FME, standardization/adaptation as well as practical implications for firms that seek to use IE in transacting business in the immigrant's COO.     

A Meta-analysis of Loss Aversion in Product Choice

Loss aversion is a behavioral phenomenon with game-changing implications for economic theory and practice. We conduct a meta-analysis of 33 studies (providing 109 observations) investigating loss aversion in random utility models of brand choice. Specifically, we use multilevel modeling techniques to examine potential moderators of preference asymmetries as well as the variability of loss-aversion effects within and between studies. We find that loss aversion is manifest in product choice, but that it exhibits substantial variation across research contexts. Product-related variables (e.g., the category type), consumer characteristics (e.g., reference-point mechanisms), and particularly methodological decisions (e.g., model specifications) determine the observed degree of loss–gain disparity. Practical implications of the specific findings and opportunities for future research are discussed.