The Effects of Monetary Magnitude and Level of Aggregation on the Temporal Framing of Price

Existing research has shown that the pennies-a-day strategy of reframing a large aggregate expense as a small daily expense helps to reduce the perceived cost of a transaction (Nagle and Holden, 1995; Price, 1995; Gourville, 1998, 1999). This paper builds on this research and explores the robustness of the phenomenon across two dimensions – (1) the level of temporal aggregation and (2) the dollar magnitude of the transaction. First, we show that the effectiveness of a pennies-a-day strategy is not limited to per-day framing. Rather, we find a more general phenomenon in which a less aggregate expense is preferred to a more aggregate expense, such that if a per-day framing is preferred to a per-year framing, than a per-month framing also will be preferred to a per-year framing. Second, we show that this effectiveness reverses with the magnitude of the underlying expense, such that while a framing of $1 per day is preferred to one of $365 per year, a framing of $4200 per year is preferred to one of $11.50 per day.     

Effects of price uncertainty on consumer purchase budget and price thresholds

This article examines how uncertainty about prices affects: (1) the budget consumers allocate for purchasing a product and (2) consumer price thresholds (i.e., the prices that are considered too high or a good deal). In an experimental setting, the purchase budget as well as the absolute values of both thresholds for uncertain subjects were higher than those for certain subjects. Moreover, a relatively large decline from the budget was needed before a price was considered a good deal, whereas a relatively small increase from the budget was sufficient for a price to be considered too high. Price uncertainty widened the difference between the upper (i.e., too high) price threshold and the budget, making uncertain subjects more tolerant to prices exceeding the budget than certain subjects. However, price uncertainty did not have a significant effect on the difference between the budget and the lower (i.e., good deal) price threshold.We wish to thank the editor and anonymous reviewers for their helpful comments on an earlier draft. We also thank Professors S. P. Raj and Amiya Basu for their comments and suggestions at various stages of the study.     

Board-management relations in small firms: The paradox of simultaneous independence and interdependence

The author introduces constructs based on neo-classical and socio-economic assumptions, and argues that board-management relations should be characterized by both independence and interdependence. Interdependence is especially important in small firms. The article presents a model of directorates from research about directorates based on agency theory assumptions. This model is supplemented with constructs from the theory of contractual relations. Whilst traditional literature tends to focus upon independence from an agency theory perspective, this article argues that it is necessary to use more than one dimension of attributes regarding the board-management relations in order to understand the board's contribution to company performance, and that trust and solidarity is especially important in small firms. Board-management relations described by simultaneous independence and interdependence are proposed to give the highest contribution to company performance. The theoretical propositions are exemplified and supported by results of a field survey of directorates in small firms.     

Common knowledge of the second kind

Although most of us know that human beings cannot and should not be replaced by computers, we have great difficulties saying why this is so. This paradox is largely the result of institutionalizing several fundamental misconceptions as to the nature of both trustworthy objective and moral knowledge. Unless we transcend this paradox, we run the increasing risks of becoming very good at counting without being able to say what is worth counting and why. The degree to which this is occurring is the degree to which the computer revolution is already over — and the degree to which we human beings have lost.I think that Aristotle was profoundly right in holding that ethics is concerned with how to live and with human happiness, and also profoundly right in holding that this sort of knowledge (practical knowledge) is different from theoretical knowledge. A view of knowledge that acknowledges that the sphere of knowledge is wider than the sphere of science seems to me to be a cultural necessity if we are to arrive at a sane and human view of ourselves or of science. (Hilary Putnam, Meaning and the Moral Sciences, 1981) David A. Bella is Professor of Civil Engineering at the College of Engineering at Oregon State University. He received his B.S. in Civil Engineering from Virginia Military Institute (1961), his M.S. and his Ph.D. in Environmental Engineering from New York University. His primary research interest is in the philosophy and sociology of technology, technological impact assessment, and moral philosophy. His most important publications are Engineering and Erosion of Trust and Organizations and Systemic Distortion of Information, Journal of Professional Issues in Engineering (1987), and Strategic Defense: Catastrophic Loss of Control, Journal of Peace Research (1989). Jonathan B. King is Associate Professor of Management at the College of Business at Oregon State University. He received his B.A. in philosophy from Antioch College (1965) and his M.B.A. in Finance (1975) and Ph.D. in Business, Government and Society (1980) from the University of Washington. His primary research interests are in the areas of moral philosophy, the philosophy of science, and critical thinking. His most important publications are The Three Face of Thinking, Journal of Higher Education (1986), Prisoner's Paradoxes, Journal of Business Ethics (1988), and Confronting Chaos, Journal of Business Ethics (1989).     

From Adam Smith to the American Catholic bishops: Debating visions of economic life

Considerable controversy was stirred by the contrast between the specific approaches to public policy contained in the first draft of the Catholic bishops' letter on the U.S. economy and the policies favored by the Reagan administration. However, a much more basic contrast actually existed between the bishops' underlying vision of economic life and contemporary capitalism. The pastoral challenges a separation between moral criteria and economic activity that is deeply embedded in modernity itself. Indeed, the splitting off of economic life from its moral-religious matrix is seen by the bishops' critics as a positive, defining feature of democratic capitalism. The critics see the separate economic and moral-religious spheres related by due balance; the bishops, while acknowledging an autonomy to economic life, emphasize that its fundamental choices remain moral. The bishops (and, for different reasons, their critics) have preferred to minimize the contrast between the letter's vision and the contemporary economy. They avoid any clearcut judgment on the economic system by stressing pragmatism and reforms; but implicitly they are granting a strictly conditioned acceptance of reformist capitalism, the condition being the system's openness to questioning and change. Peter Steinfels is Editor of Commonweal Magazine and he is the author of The Neoconservatives (Simon and Schuster, 1979).     

Student Ethical Perceptions and Ethical Action Propensities: An Analysis of Situation Familiarity

Recently McCuddy and Peery (1996) have suggested that business students may not respond the same way to unfamiliar business ethical dilemmas as they would to more familiar academic ethical dilemmas. The purpose of this study was to present the same students with both unfamiliar business dilemmas as well as possibly more familiar academic dilemmas in order to examine this issue.Findings of the study revealed that students did not exhibit different perceptions of the unethical actions performed in the academic and accounting/business ethical vignettes. However, the students indicated that both they and their peers would be more likely to act unethically to resolve the dilemmas in the accounting/business cases than in the academic cases. This finding is troubling in that it suggests that students either feel less compelled to act ethically in business, or that they perceive that ethical standards in the business world are generally low when compared to their current educational environment. In addition, the students in the study maintained the same halo effect (i.e., the difference between an individual's perception of their likelihood of performing an unethical action compared to their perception of their peers' likelihood to perform the same unethical action) across the two types of ethical dilemma.     

Can Ethical Organizational Character Be Stimulated and Enabled?: “Upbuilding” Dialog As Crisis Management Method

Crisis management can be simultaneously a content specific problem solving process and an opportunity for stimulating and enabling an organizations ethical tradition. Crisis can be an opportunity for ethical organizational development. Kierkegaardian upbuilding dialog method builds from within the internal ethical tradition of an organization to respond to crises while simultaneously adapting and protecting the organizations tradition. The crisis itself may not be a directly ethical crisis, but the method of responding to the crisis is built upon the ethical foundations of an organizations tradition. A limitation of this method is that it may be less applicable to organizations with questionably ethical traditions. The concept of upbuilding dialog is derived from Kierkegaard, but here is applied to organizational crisis management. The method is illustrated and discussed in the context of a wrongful death crisis of the Dana- Farber Cancer Institute, a nonprofit organization, and an economic survival crisis at Ben and Jerrys, a business organization.     

An Exercise in Moral Philosophy: Seeking to Understand “nobody”

The late Hannah Arendt proposed that many, perhaps most monstrous deeds are not committed by moral monsters but by individuals who do not think. However, understanding the significance of activity of thinking as such requires a moral philosophy that transcends rational actor assumptions and instrumental reason centering, instead, on the conditions of self-knowledge. The ubiquitous and often lethal phenomenon of information distortions provides a vehicle for expanding our understandings of individual moral response-abilities in our modern times.     

Collectively negotiated agreements: Proposed reforms in France

This report deals with proposed reforms in France relating to negotiations between suppliers' and consumers' organizations. The author of the report was himself chairman of the French Commission de Refonte (Commission for Reform of Consumer Law).The proposed legal reforms have not yet received the requisite political assent, and indeed reaction thereto seems quite mixed. The draft law foresees two types of agreement between consumers' and suppliers' organizations: ordinary agreements and extended agreements, according to the degree of strict applicability.The ambit of the two types of agreement is identified in this report: ordinary agreements shall apply to all signatory consumer and trade associations. Extended agreements may, upon ministerial order, be declared nationally applicable to all associations involved.The proposed reforms reflect a considerable strengthening in the consumer bargaining role, even although it is not yet clear whether the proposals will be adopted. The reform should also have an effect on class actions brought by consumers.

---

Kollektiv ausgehandelte Vereinbarungen: französische Reformvorschläge

Zusammenfassung Der Beitrag berichtet von einem Vorschlag der französchen Commission de refonte (Kommission zur Erneuerung des Rechts), deren Vorsitz der Autor innehat, auf dem Wege über kollektiv ausgehandelte Vereinbarungen zwischen Unternehmen und Verbraucherorganisationen eine Verbesserung der Konsumentenstellung zu erreichen. Der Gesetzentwurf, der noch ncht die Billigung politischer Gremien erfahren hat, will lediglich einen rechtlichen Rahmen für solche Vereinbarungen abgeben, ohne den Grundsatz der Freiwilligkeit zu beschränken. Je nach Umfang der Verbindlichkeit unterscheidet der Entwurf zwischen zwei Typen von Vereinbarungen: normale und erweiterte Vereinbarungen. Normale Vereinbarungen werden zwschen repräsentativen Verbraucherorganisationen und Unternehmen bzw. Verbänden ausgehandelt. Sie gelten verbindlich für alle Verbandsmitglieder und kommen allen betroffenen Verbrauchern zugute. Sie können auf nationaler, aber auch auf regionaler oder lokaler Ebene abgeschlossen werden. Nationale Vereinbarungen können durch Dekret des Verbraucherministeriums unter bestimmten Voraussetzungen für allgemeinverbindlich erklärt werden. Sie binden dann alle Unternehmen einer Branche. Eine Reihe von Verfahrensvorschriften will sowohl die Flexibilität als auch die Effektivität des vorgeschlagenen Regelungsinstrumentariums sicherstellen.

---

---

Jean Calais-Auloy is Professor of Law at the University of Montpellier, Faculté de Droit, F—34000 Montpellier, France. He is Chairman of the Commission for Reform of Consumer Law.     

The interrelationships between births and deaths

This paper provides a preliminary study of the way in which the births and deaths of firms interactover time. It uses the retailing sector as a case study, although the results also have relevance for other sectors. Section I of the paper introduces the background to the paper. Section II provides a non mathematical theoretical framework for analysing the births/deaths interrelationship. It identifies three separate types of effect operative in these interrelationships: the competition, multiplier and Marshall (life cycle) effects. The data used in this study (Value Added Tax registrations and deregistrations) and their limitations are considered in Section III. Section IV presents the preliminary empirical results. This section utilises panel data vector autoregression techniques to identify the salient birth-death relationships. The final section concludes the paper and draws out possible policy conclusions. It also suggests avenues for further work.     

Individual strategies in a market entry game

Quantitatively trained Ph.D. students participated in three replications of a 20-trial market entry game in which each agent has two pure strategies—to enter the market or stay out of the market—and the individual payoff depends on the size of the set of active agents entering the market. With experience, subjects adhered more strictly to pure strategies, which although markedly different from one to the other combined to form distributions supporting a Nash equilibrium solution to the game.     

On Creating and Claiming Value in Negotiations

This paper presents a negotiation model that includes value creation. It shows that creative negotiation efforts tend to intensify toward the deadline, and that the deadline is determined endogenously by the tension between two motives, creating more value and claiming from existing value. When the parties can present misleading offers in order to claim rather than create value, the outcome in early negotiation rounds may display an impasse where any proposal is rejected without inspection, while negotiation activities such as value creation through sincere offers and inspection of clauses intensify toward the deadline.     

Corporate democracy and the rights of shareholders

Some have argued that because of weaknesses in corporate democracy, there is widespread abuse of shareholders' rights in American securities markets. I describe a number of horror stories that shareholders might tell to support this claim. Then I argue that despite appearances to the contrary, there is not widespread abuse of shareholders' rights in American securities markets. This is because (i) corporations, when doing things that look abusive, are generally violating neither the legal rights nor the charter rights of shareholders and (ii) shareholders — in their role as shareholders — have no other rights than these. William B. Irvine is Assistant Professor of Philosophy at Wright State University. He is the author of The Ethics of Investing, Journal of Business Ethics, vol. 6, no. 3.     

The economics of open source software for a competitive firm

Large quantities of software, ranging from operating systems to web servers to games, are now available as open source software or free software. In many cases, this software is backed by large profit seeking corporations such as IBM. Traditional economic analysis is used to identify the costs and benefits to firms of using open source rather than proprietary solutions, particularly in the case of the firm releasing code to the world when not obliged to do so. Examples of large companies backing open source are examined in light of the profit motive. Additionally, open source is also analyzed as a quasi-public good.     

Friedman fallacies

Milton Friedman's article, The Social Responsibility of Business Is To Increase Its Profits, owes its appeal to the rhetorical devices of simplicity, authority, and finality. More careful consideration reveals oversimplification and ambiguity that conceals empirical errors and logical fallacies. It is false that business does, or would, operate exclusively in economic terms, that managers concentrate obsessively on profitability, and that ethics can be marginalized. These errors reflect basic contradictions: an apolitical political base, altruistic agents of selfishness, and good deriving from greed. Colin Grant is a Professor in the Department of Religious Studies at Mount Allison University. He teaches an undergraduate course on The Ethics and Ethos of Business. His article Giving Ethics the Business appeared in JBE 7 (1988), pp. 489–495. Some of the journals in which he has published are: The Christian Century, The Dalhousie Review, Journal of the American Academy of Religion, Modern Theology, Religious Studies, Studies in Religion/Sciences Religieuses, The Toronto Journal of Theology.     

Beyond bean counting: Establishing high ethical standards in the public accounting profession

Business professions are increasingly faced with the question of how to best monitor the ethical behavior of their members. Conflicts could exist between a profession's desire to self-regulate and its accountability to the public at large. This study examines how members of one profession, public accounting, evaluate the relative effectiveness of various self-regulatory and externally imposed mechanisms for promoting a climate of high ethical behavior. Specifically, the roles of independent public accountants, regulatory and rule setting agencies, and undergraduate accounting education are investigated. Of 461 possible respondents, 230 questionnaires (a 49.6% response rate) indicated that the profession's own rule setting body (The American Institute of Certified Public Accountants) and the use of peer review were perceived as the most effective mechanisms, while government regulation was ranked least. Respondents also evaluated the extent to which ethics should be covered in the accounting curriculum. For every course, the CPAs believed a greater emphasis on ethics is appropriate than presently exists. Suggestions for more effectively integrating ethics into accounting courses are made. Finally, respondents were also asked whether in answering the questionnaire they used a definition of ethics as either the Professional Code of Conduct or a moral and philosphical framework for guiding beliefs. Those who viewed ethics as abiding by a professional code had more confidence in the mechanisms addressed in this study to aid the public accounting profession's ability to ensure high ethical standards of conduct. Methodological implications of this distinction for future studies in business ethics are discussed. Jeffrey R. Cohen is Assistant Professor of Accounting at Boston College. He received his Ph.D. from The University of Massachusetts at Amherst. He is a C.M.A. and a Peat Marwick Research Fellow. His articles have appeared in the Journal of Accounting Research, Decision Sciences and The Organizational Behavior Teaching Review. His work on Ethics has appeared in Issues in Accounting Education, Management Accounting, and The CPA Journal. Laurie W. Pant is Assistant Professor of Accounting at Boston College. She holds an M.B.A. and a D.B.A. from Boston University and an M.Ed. from Emory University. She serves on the editorial board of Issues in Accounting Education. Her articles on Ethics have appeared in Issues in Accounting Education, Management Accounting and The Organizational Behavior Teaching Review.An earlier version of this paper was presented at the 1989 American Accounting Association National Meeting.     

Drama theory and its relation to game theory. Part 2: Formal model of the resolution process

In a drama, characters' preferences and options change under the pressure of pre-play negotiations. Thus they undergo change and development. A formal model of dramatic transformation is presented that shows how the core of a drama is transformed by the interaction among the characters into a strict, strong equilibrium to which they all aspire. The process is seen to be driven by actors' reactions to various paradoxes of rationality.     

Deception in commercial negotiation

Buyers and sellers of inputs of production, to the degree that they must negotiate directly with each other and cannot have recourse to more impersonal markets, share in certain aspects of bilateral monopoly. Under these circumstances, and assuming profit maximizing goals for each, deception often seems to be an unavoidable characteristic of negotiation.... I hate, detest, and can't bear a lie, not because I am straighter than the rest of us, but simply because it appalls me. There is a taint of death, a flavor of mortality in lies ... — JOSEPH CONRAD, Heart of Darkness.     

Tools-Я-us

Our methods of inquiry predetermine most of what we are able to know. While our modes of understanding ought to correspond to the complexities confronting us in our modern technological society, they do not. Soft systems methodology helps us focus on what is problematic and how it can be approached — and offers direction to exert moral control over our tools and technologies.

相似文献   

Market Structures with Multi-product Firms: Welfare Analysis and Policy Implications

In the real world firms operate in more than one market and consequently can exploit scope economies and/or demand complementarities. Introducing multi-product firms in the picture makes the standard assumption that more competition is always beneficial for social welfare less clear-cut. In this paper we show that a concentrated structure can be socially preferable in the presence of scope economies, whereas a fragmented structure has to be preferred when products are close substitutes. We also identify either analytically or numerically the socially optimal market structure when aggregate output (and then consumer surplus) or total welfare are used as ranking criteria. The analysis is useful for discussing which market structure should be favored by policy makers aimed at introducing competition in sectors which were previously monopolized by state-owned firms. To that respect, our findings point out that not only the level (number of firms) but also the form (type of firms) of competition matters.