Smiles over Frowns: When Curved Lines Influence Product Preference

The present research examined the possibility that subtle face‐like features (a smile‐ or a frown‐like line) on a product can influence evaluations of and preferences for that product. The same within‐participants experiment was conducted twice, once in the United Kingdom and once in Colombia: participants viewed four variants (concave [smile‐like] line, convex [frown‐like] line, straight line, line absent) of three different products (tea, shampoo, juice) and both evaluated the products on visual analogue scales and completed a forced choice decision task. The results revealed a general tendency across scales, products, and countries for the participants to rate products more positively and to choose products more frequently when they displayed a concave line relative to a convex line; comparisons with the straight line and absent line conditions suggested that the effects were present for both concave and convex lines, but were stronger in the concave instance. These findings provide both a deeper theoretical understanding of the influence of subtle cues on evaluation and decision making, and concrete, practical information for both product designers and marketers.     

Strategic network formation through peering and service agreements

We introduce a game theoretic model of network formation in an effort to understand the complex system of business relationships between various Internet entities (e.g., Autonomous Systems, enterprise networks, residential customers). In our model we are given a network topology of nodes and links where the nodes act as the players of the game, and links represent potential contracts. Nodes wish to satisfy their demands, which earn potential revenues, but may have to pay their neighbors for links incident to them. We incorporate some of the qualities of Internet business relationships, including customer–provider and peering contracts. We show that every Nash equilibrium can be represented by a circulation flow of utility with certain constraints. This allows us to prove bounds on the prices of anarchy and stability. We also focus on the quality of equilibria achievable through centralized incentives.     

The Paradoxical Behavioral Effects of a Directional Goal on Investors' Risk Perceptions and Valuation Judgments

Market participants who evaluate risk often have a preference or goal for positive company performance. The authors test how such a directional goal affects risk perceptions and the relation between risk perceptions and assessments of value in an investment context. Compared with investors without directional goals—who, consistent with prior behavioral research, focus on negative aspects of risk—the authors find that those with directional goals assess risk as being more symmetric (i.e., they are less focused on downside risk). However, investors with directional goals are also less likely to consider risk when assessing value. Taken together, these results suggest that a directional goal reduces one behavioral effect identified in prior literature (the tendency to focus on downside risk), but creates another behavioral effect (ignoring risk in assessing value). The authors discuss implications for standard setters and regulators seeking to communicate risk information to market participants.     

PRODUCT FULFILLMENT IN SUPPLY CHAINS SUPPORTING INTERNET‐RETAILING OPERATIONS

Customer service, based on economical logistics operations across the supply chain, is key to the realization of sustainable levels of profitability in Internet retailing. Concentrating on inventory and product‐release operations, an empirical simulation model suggests that inventory centralization and market demand growth positively affect the level of cost‐effective service received by online shoppers. The results also show that under increasing demand levels, Internet retailers can provide optimal service to consumers by fulfilling orders through inventories located at their own facilities and avoid relying on inventories held elsewhere in the supply chain.     

DEMAND COLLABORATION: EFFECTS ON KNOWLEDGE CREATION,RELATIONSHIPS, AND SUPPLY CHAIN PERFORMANCE

While demand collaboration is crucial to supply chain performance, there is divergence over what demand collaboration really means. Currently, one perspective stresses the use of electronic communication systems for real‐time data exchange (e.g., EDI, VMI) to increase speed of response and reduce costs, thereby improving operational efficiencies. Another perspective stresses relational elements to create close, long‐term links. These links, facilitated largely through the use of non‐electronic communication channels, serve the purpose of developing complementary capabilities, sharing more information, and engaging in more joint planning. In this study, we provide a framework that considers both elements of demand collaboration individually and jointly. The relative effectiveness of the various forms of demand collaboration is assessed via the use of a controlled simulation experiment.     

Nicaragua and the Dead Hand of Planning

Daniel Ortega (above), President of Nicaragua, attracted attention after the Sandanista take-over by declaring his intention to allow state and market to co-exist. But his increased emphasis on the role of the state has severely impaired the wealth-creating capacity of the attenuated private sector. Nick Elliott, Editor of The Moderate, surveys the damaging effects of Nicaraguan socialism.     

Lock-in situations in supply chains: A social exchange theoretic study of sourcing arrangements in buyer–supplier relationships

Social exchange theory is used to gain a better understanding of the relationship between a buyer and a supplier that is characterized by lock-in situations. We begin by reviewing the theoretical foundations of social exchange theory. Next, we use an illustrative multinational business example from a Danish Business Group to demonstrate the complexities of the lock-in situation. Conjectures related to lock-in behaviors are initially developed and then examined by means of a game-theoretic model. The analysis provides a basis for the development of propositions which are examined employing a behavioral experiment. The results indicate that the optimal pricing strategy of the supplier is to lower the price with increasing demand and the optimal investment intensity of the buyer decreases with increasing demand. The paper concludes by presenting directions for future research.     

Regulation, technology strategy and energy policy: the missing link

Two new regulatory agencies were establishd as part of the process of privatization of the gas and electricity industries in the UK and, subsequently, an independent Energy Saving Trust was setup. This paper explores some of the problems these bodies face in attempting to operate effectively, with regard to the development and deployment of new renewable energy and enw-saving technologies, in the absence of a fully developed national energy policy. It also asks whether they can be seen as in any way prototypes for more radical, interventionist types of regulatory agency, and whether, as some intmentionists would prefer, these agencies could play a more positive role in shaping the development of technology and technology policy.