Economics, Psychology, and Social Dynamics of Consumer Bidding in Auctions

With increasing numbers of consumers in auction marketplaces, we highlight some recent approaches that bring additional economic, social, and psychological factors to bear on existing economic theory to better understand and explain consumers' behavior in auctions. We also highlight specific research streams that could contribute towards enriching existing economic models of bidding behavior in emerging market mechanisms. This paper is based on the special session at the 6th Triennial Invitational Choice Symposium, University of Colorado Boulder, June 2004 (co-chaired by the first two authors).     

Modeling preference evolution in discrete choice models: A Bayesian state-space approach

We develop discrete choice models that account for parameter driven preference dynamics. Choice model parameters may change over time because of shifting market conditions or due to changes in attribute levels over time or because of consumer learning. In this paper we show how such preference evolution can be modeled using hierarchial Bayesian state space models of discrete choice. The main feature of our approach is that it allows for the simultaneous incorporation of multiple sources of preference and choice dynamics. We show how the state space approach can include state dependence, unobserved heterogeneity, and more importantly, temporal variability in preferences using a correlated sequence of population distributions. The proposed model is very general and nests commonly used choice models in the literature as special cases. We use Markov chain monte carlo methods for estimating model parameters and apply our methodology to a scanner data set containing household brand choices over an eight-year period. Our analysis indicates that preferences exhibit significant variation over the time-span of the data and that incorporating time-variation in parameters is crucial for appropriate inferences regarding the magnitude and evolution of choice elasticities. We also find that models that ignore time variation in parameters can yield misleading inferences about the impact of causal variables. This paper is based on the first author's doctoral dissertation.     

Sequential sampling models of choice: Some recent advances

Choice models in marketing and economics are generally derived without specifying the underlying cognitive process of decision making. This approach has been successfully used to predict choice behavior. However, it has not much to say about such aspects of decision making as deliberation, attention, conflict, and cognitive limitations and how these influence choices. In contrast, sequential sampling models developed in cognitive psychology explain observed choices based on assumptions about cognitive processes that return the observed choice as the terminal state. We illustrate three advantages of this perspective. First, making explicit assumptions about underlying cognitive processes results in measures of deliberation, attention, conflict, and cognitive limitation. Second, the mathematical representations of underlying cognitive processes imply well documented departures from Luce’s Choice Axiom such as the similarity, compromise, and attraction effects. Third, the process perspective predicts response time and thus allows for inference based on observed choices and response times. Finally, we briefly discuss the relationship between these cognitive models and rules for statistically optimal decisions in sequential designs.     

Spatial Models in Marketing

Marketing science models typically assume that responses of one entity (firm or consumer) are unrelated to responses of other entities. In contrast, models constructed using tools from spatial statistics allow for cross-sectional and longitudinal correlations among responses to be explicitly modeled by locating entities on some type of map. By generalizing the notion of a map to include demographic and psychometric representations, spatial models can capture a variety of effects (spatial lags, spatial autocorrelation, and spatial drift) that impact firm or consumer decision behavior. Marketing science applications of spatial models and important research opportunities are discussed. This paper is based upon the discussions of the Spatial Models in Marketing seminar at the Sixth Invitational Choice Symposium, June 2004. Eric T. Bradlow, Bart Bronnenberg and Gary J. Russell served as co-chairs of the session.     

Recent Advances in Structural Econometric Modeling: Dynamics, Product Positioning and Entry

In the empirical analysis of consumer markets, recent literature has begun to explore the dynamics in both consumer decisions as well as in firms' marketing policies. Other research has begun to explore the strategic aspects of product line design in a competitive environment. In both cases, structural models have given us new insights into consumer and firm behavior. For example, incorporating consumer and firm dynamics may help explain patterns in our data that are not well-captured by static models. Similarly, the strategic aspects of firm entry and product-positioning may be intrinsically linked to firm conduct and the intensity of competition in a market. Structural analysis of these consumer and firm decisions raise a number of substantial computational challenges. We discuss the computational challenges as well as specific empirical applications. The discussions are based on the session “Structural Models of Strategic Choice” from the 2004 Choice Symposium.     

The diffusion of a new service: Combining service consideration and brand choice

We propose an individual-level model of a two-stage service diffusion process. In the first stage, customers decide whether to “consider” joining the service. This (Consideration) stage is modeled by a hazard model. Customers who decide to consider the service move on to the Choice stage, wherein they choose among the service alternatives and an outside No Choice option. This stage is modeled by a conditional Multinomial Logit model. The service provider does not observe the transition in the first stage of potential customers who have yet to choose a brand. Such potential customers may have started to consider joining the service, yet chose the outside alternative in each period thereafter. One of the main contributions of the model is its ability to distinguish between these two non-adopter types. We estimated the model using data on the adoption process of newly introduced service plans offered by a commercial bank. We employed the hierarchical Bayes Monte Carlo Markov Chain procedure to estimate individual as well as population parameters. The empirical results indicate that the model outperforms competing models in breadth of analysis, model fit, and prediction accuracy.     

A New Look at Constructed Choice Processes

Normative models of choice assert axiomatically that preferences are consistent, coherent, and determined only by relevant alternatives. In contrast to this classical economic perspective, behavioral models derived from research in psychology and consumer behavior assert that preferences are not guided by an internal, stable utility function but are constructed during the choice process. The current paper is based on a session on constructed choice processes (CCP) at the 2004 Choice Symposium that focused on how the standard CCP model can be enriched by bringing theories and tools from modern research in social cognition to bear on choice phenomenon. The richer conceptual framework presented by new, currently unpublished empirical work provides a novel perspective on choice construction by integrating the roles of subjective construal, experiential information, attribution, goals, and satisfaction in understanding preference construction processes in choice.     

Understanding Supermarket Competition Using Choice Maps

In this paper we propose a model which combines the spatial interaction models with the latest developments in internal market structure analysis and allows us to infer supermarket competition from revealed preference data. Using a nested logit formulation we model consumers' store choice decisions to be a two stage process in which consumers choose first the suburb and then the store from which to buy groceries. Hence, our method allows retail managers not only to understand the advantage (or disadvantage) of having their store chain in a particular area but also assess the competition within that area. Comparisons to Factor Analytic Choice Map is made.     

Brand inequalities in the loyalty-effects of purchases

Choice models in marketing have generally included the effects of loyalty on individual choice behavior.Loyalty has been typically measured as proportion of purchases or as an exponentially smoothed index of past purchases. An underlying assumption of both measures is that all brands gain the same increase in loyalty with a purchase. However, such an assumption may not hold when the competing brands are not comparable. We propose a new exponential smoothing measure which incorporates brand-specific parameters for the loyalty effects of purchases. A choice model, calibrated on individual level data for the detergent category, is used to compare the proposed measure with its traditional version. This comparison reveals that the new approach improves both the fit and predictive performance of the choice model. The results also suggest that the loyalty effects of purchases are likely to be lower for brands which are purchased on price promotions and higher for expensive brands.     

The necessity for a strategic approach to monetary policy

The Fed has a spotty track record, and its discretionary approach to conducting monetary policy will lead to the same mistakes it made in the past. I emphasize the importance of adopting a strategic framework for conducting monetary policy. The Fed has constantly changed the course of monetary policy in response to high-frequency data and other temporary factors. The Fed’s excessive monetary ease has distorted economic and financial behavior. The Fed should base its policy on longer-run objectives rather than short-run economic and financial fluctuations, and communicate these objectives to the public and to financial markets. Under the Financial Choice Act, the Fed would have to establish a strategic guideline, and explain to Congress why monetary policy may be deviating from the guideline. I respect the Fed and see the need for change to maintain its credibility. The Fed must acknowledge its shortfalls and modify its focus.     

Wine choice and drivers of consumption explored in relation to generational cohorts and methodology

The objectives of the present study were to: (1) assess the relative importance of driver and choice factors in wine consumption behaviour, (2) assess the impact of generational cohorts upon drivers of wine consumption and wine choice factors, and (3) compare the present study's survey results relating to wine choice to those obtained by means of Discrete Choice Analysis (DCA). A geographically balanced sample of 1,229 Australian wine consumers was obtained via means of telephone survey. The results of the present study indicate that taste is the primary choice and driver factor. The present findings failed to support the empirical literature's predications relating to generational cohorts and wine consumption behaviour. Further research is required in order to assess the suitability of making and marketing wine based on generational cohort characteristics. Finally, the findings of the present study suggest that, when it comes to wine choice, a simple, cost and time effective questionnaire that utilises indirect questioning may be equally as effective as DCA. If further research continues to show congruence between results collected using both methodologies, the research community may be behoved to continue the use of traditional survey methodology.     

模糊综合评价法在电信企业顾客忠诚度评价中的应用

选择能够将定量指标与定性指标良好结合的模糊综合评价法作为评价方法,构建出电信企业顾客忠诚度的评价体系后,结合实际,采用调研分析等方法,对某电信企业的顾客忠诚度进行了评价。本文旨在建立一个有效的、具备可实施性的电信企业顾客忠诚度的评价体系,以此来了解企业的顾客忠诚度状况,期望对电信企业的发展起到一定的指导作用。     

Fresh Choice Restaurants,Inc.—Good Practices in Neighborhood Marketing

Abstract

This article provides a case study of how Fresh Choice Restaurants use neighborhood or local area marketing to create positive community relations. Specific examples of how Fresh Choice implements neighborhood marketing are provided in the article.     

The use of multinomial choice analysis in international business research

Many strategic decisions made by firms involve a choice among several discrete alternatives. International Business (IB) scholars are often interested in modelling the factors that potentially influence these (multinomial) choices: these factors might include not only characteristics of the firms making the choices but also attributes of the alternative choices. This paper provides a succinct and intuitive introduction to the possible applications of multinomial choice models in IB research. We briefly outline the theory behind discrete choice modelling, and then explain how multinomial choice models may be estimated (including how the datasets need to be formatted) and how the significance of the coefficient estimates as well as the diagnostic statistics may be tested and interpreted.     

我国出口国(区)别分布及出口增长的影响因素

本文基于1997-2008年我国对25个主要贸易伙伴出口额等面板数据建立了6个贸易引力模型,筛选出了两国首都(城市)之间贸易平均里程等10个影响贸易流量及出口增长的因素,通过对比研究,发现不同因素对我国出口流量的国别分布以及出口增长有着不同程度的影响。同时,本文给出了某一年份我国对不同贸易伙伴的名义和实际出口增长潜力的测算方法。     

基于现代信息技术的营销组合决策研究

本文以现代信息技术为主要手段,以营销组合模型的构建和应用为研究对象,通过在非价格营销因素的市场反应模型的基础上引入非价格因素的递延效应,对价格与非价格营销因素组合原理和方法进行研究;通过论述价格与非价格营销因素之间的相互影响及其组合效应,构建了价格与非价格营销因素的组合决策模型;基于已构建的市场反应模型和营销组合模型,研发了具有高度人机交互性和可操作性的营销决策支持系统,并以模拟数据验证了模型的有效性。     

Causal Effects of Regulatory, Organizational and Personal Factors on Ethical Sensitivity

Prior researchers have studied individual components of a theoretical decision-making model. This paper presents the results of a more complete study of the model components and presents limited support of theory. The study examines the relative importance of regulatory, organizational, and personal constructs on an individual's ethical sensitivity. Auditors from the major international accounting firms, located in two southeastern cities, are surveyed. Structural equation modeling is used to allow for the simultaneous evaluation of the three constructs of interest. The results indicate that the regulatory and organizational constructs are negatively correlated with the personal experience construct. The three constructs are not significant causal factors on ethical sensitivity. This result may be due to the manner in which ethical sensitivity is typically measured or may indicate that the complexity of the ethical decision-making process is not fully captured in the theoretical models. Thus, the models suggested in the prior literature and the results presented in prior studies of the individual components may need to be reconsidered.     

我国服务贸易竞争力评价及影响因素的实证研究

选取1982-2007年的样本数据,在服务贸易竞争力常用指标基础上通过主成分因子分析法构建了我国服务贸易竞争力的综合评价指标,并以此作为回归因变量,借鉴波特的国家竞争优势理论模型,实证研究了影响我国服务贸易竞争力的各种因素。研究结果表明,采用主成分因子分析法构建的竞争力综合评价指标比目前普遍采用服务出口额作为竞争力替代变量的研究方法具有更好的模型回归效果和经济解释意义,最后针对实证模型的回归结果提出了相关的政策建议。