On the reduced effectiveness of some sexually suggestive ads

Existing research on the effects of sexually suggestive illustrations in advertising has reported reduced recall of brand names and product information as well as negative product attitudes. This study evaluates two explanations for the reduced recall. A negative affect explanation hypothesizes that a viewer's attitudinal response to the suggestive material interferes with recall. An attention-distraction explanation hypothesizes that the visual draw of the suggestive illustrations decreases reading time for the ad copy. Ads varying in suggestiveness were viewed by male and female college students. Recall of both brand names and product information was lower for all suggestive ads. Recall differences were found to be totally unrelated to all affect differences, to measures of general attitudes toward the use of sex in advertising, and to demographic variables but were generally consistent with independent ratings of the visual characteristic of the illustrations. These results favor the attention-distraction hypothesis. Implications for advertising strategy are discussed.     

Asymptotic methods for asset market equilibrium analysis

Summary. General equilibrium analysis is difficult when asset markets are incomplete. We make the simplifying assumption that uncertainty is small and use bifurcation methods to compute Taylor series approximations for asset demand and asset market equilibrium. A computer must be used to derive these approximations since they involve large amounts of algebraic manipulation. We use this method to analyze the allocative and welfare effects of introducing a new security. We find that adding any nontrivial derivative security will raise the price of the risky security relative to the bond when risks are small. Received: April 1, 2000; revised version: January 10, 2001     

Asset Trading Volume with Dynamically Complete Markets and Heterogeneous Agents

Trading volume of infinitely lived securities, such as equity, is generically zero in Lucas asset pricing models with heterogeneous agents. More generally, the end‐of‐period portfolio of all securities is constant over time and states in the generic economy. General equilibrium restrictions rule out trading of equity after an initial period. This result contrasts the prediction of portfolio allocation analyses that portfolio rebalancing motives produce nontrivial trade volume. Therefore, other causes of trade must be present in asset markets with large trading volume.     

Redistributive taxation in a simple perfect foresight model

We investigate the redistributive potential of capital taxation in an intertemporal maximizing model of capital formation. First, even unanticipated redistributive capital taxation is severely limited in its effectiveness since it depresses wages. Second, under any convergent redistributive tax policy which maximizes a Paretian social objective, the capital income tax will converge to zero, independent of the factor supply elasticities. These results are independent of workers' holdings of capital.     

Short-term fluctuations in incidental happiness and economic decision-making: experimental evidence from a sports bar

Experimental Economics - We develop a new experimental paradigm to study how emotions affect decision-making. We use it to investigate the impact of short-term fluctuations in incidental happiness...