An experimental test of automatic mitigation of wholesale electricity prices

In several major deregulated electricity generation markets, the market operator uses an “automatic mitigation procedure” (AMP) to attempt to suppress the exercise of market power. A leading type of AMP compares the offer price from each generation unit with a recent historical average of accepted offer prices from that same unit during periods when there was no transmission-system congestion to impede competition. If one or more units' offer prices exceed the recent historical average by more than a specified margin, and if these offer prices raise the market-clearing price by more than a specified margin, the market operator replaces the offending offer prices with lower ones. In an experiment, we test an AMP of this type. We find that it keeps market prices close to marginal cost if generation owners have low market power in uncongested periods. However, with high market power in uncongested periods, a condition that may apply in many parts of the world, the generation owners are able to gradually raise the market price well above short-run marginal cost in spite of the AMP. We also test the effect of the AMP on the frequency with which high-variable-cost units are used, inefficiently, in place of low-variable-cost units.     

Why do firms switch underwriters?

In the mid-1990s, 30% of firms completing an SEO within three years of their IPO switched lead underwriter. This article provides evidence on why they switched. Contrary to predictions of prior research, there is little evidence that firms switch due to dissatisfaction with underwriter performance at the time of the IPO. A surprising result is that switchers’ IPOs were significantly less underpriced than non-switchers’ IPOs. However, switchers raised fewer proceeds than expected, compared to the mid-point of the filing range, while non-switchers raised significantly more proceeds. There are two main reasons for switching. Firms graduate to higher reputation underwriters, and they strategically buy additional and influential analyst coverage from the new lead underwriter. Survey results support these conclusions.     

Effects of price framing on consumers’ perceptions of online dynamic pricing practices

The viability of online dynamic pricing, or differential pricing for the same product from the same seller, is still debatable given the contradictory findings reported in both modeling and behavioral price research. This paper examines tactical ways for online merchants to mitigate consumers’ negative reactions when adopting dynamic pricing strategies. In three experiments, we show that using various price-framing tactics, compared to no framing, can induce price-disadvantaged consumers to perceive their ostensibly similar transactions differently relative to their comparative other parties. As the degree of perceived transaction dissimilarity increases, price-disadvantaged consumers’ perceived price fairness, trust, and repurchase intentions are enhanced. We further compare different price framing tactics and demonstrate that they have different effects on consumers across different product price levels, customer segments, and framing formats. The paper concludes with theoretical and managerial implications of the research.     

Detecting discrimination in the hiring process: evidence from an Internet-based search channel

This article uses data from an Internet-based CV database to study how job searchers?? ethnicity, employment status, age, and gender affect how often they are contacted by firms. Since we know which types of information that are available to the recruiting firms, we can handle some of the problems with unobserved heterogeneity better than many existing discrimination studies. We find that searchers who have non-Nordic names, are unemployed or old get significantly fewer firm contacts. Moreover, this matters for the hiring outcome: searchers who get more contacts have a higher probability of getting hired.     

Establishing human brands: determinants of placement success for first faculty positions in marketing

Based on primary data spanning 5 years, we examine factors that influence the entry-level placement of marketing doctoral candidates at U.S. universities and colleges. Contributing to the emerging research on human brands, we identify marketing doctoral candidates’ intrinsic and extrinsic brand cues that influence their number of AMA interviews, campus visit offers, and starting base salary. The strongest brand cue is the research productivity of candidates’ doctoral degree-granting departments. A related cue that also predicts initial salary is the candidates’ advisors’ research record. Further, when beginning the job search, doctoral students who have a top research publication, who have a dissertation proposal defended with data, and who have attended the AMA-Sheth Foundation Doctoral Consortium receive a substantial entry salary premium. Based on branding frameworks and theories of academic rewards, this study adds to the emerging knowledge on both the concept of human brands as well as the growing literature on issues relating to marketing academia.     

A Cautionary Note on the Use of Benefit Metrics for Cost-Effective Conservation

Cost-effective land conservation techniques, such as optimization, have the potential to contribute substantially to the provision of many important environmental benefits, such as biodiversity protection, flood control, food security, water quality, and reduction of greenhouse gas emissions. There has been a recent push for conservation organizations to adopt project selection optimization approaches such as binary linear programming. The metrics used to measure the benefits of a project however, are often poorly defined in that they do not directly compute a value. These scores represent normalized measurements of underlying values that are likely log-normally distributed. Applying such metrics in optimization will tend to undervalue high-benefit projects and select a suboptimal portfolio of projects relative to simpler approaches. This suboptimal performance can lead to losses in efficiency as high as 30%. We propose a hybrid optimization heuristic that can improve performance and, additionally, provide conservation professionals with more flexibility and freedom to select conservation projects at their discretion—potentially overcoming a substantial real-world adaptation hurdle.     

Behavioural responses to science-based eco-labelling: gold,silver, or bronze

This study uses unique data collected from field experiments to investigate consumer willingness to pay (WTP) for otherwise homogeneous commodities that provide different levels of environmental services. On average, individuals are willing to pay more for products that provide a higher level of ecosystem services. This effect is larger when the label contains symbols that explicitly differentiate the levels. The effect magnitude is further amplified when it contains brief information on the scientific basis for the levels. However, our results also suggest that the WTP premium for the superior product is smaller than the discount in WTP for the inferior product.