Impact of retail environment extraordinariness on customer self-concept

This research examines the effect of extraordinary retail environments on consumer self-concept. Two between-subjects experiments manipulate the extraordinariness of the retail environment and evaluate participants' self-concept in the environment. In both experiments, high-extraordinariness retail environments elicit a more atypical working self-concept than low-extraordinariness environments. Content analysis of participants' working self-concept in the two environments offers insight into the cognitive processes underlying the effect. The article discusses managerial and theoretical implications of the research.     

Monopoly regulation without the Spence–Mirrlees assumption

The paper extends the Baron and Myerson [Baron, D., Myerson, R.B., 1982. Regulating a monopolist with unknown costs. Econometrica 50, 911–930] model of monopoly regulation to bidimensional adverse selection: both the marginal cost and the fixed cost of the monopoly are unknown to the regulator. Like in Araujo and Moreira [Araujo, A., Moreira, H., 2000. Adverse section problems without the Spence–Mirrlees condition. Fundação Getulio Vargas, Rio de Janeiro, Ensaios Economicos 389], the paper provides an explicit solution of a screening model without the Spence–Mirrlees assumption.     

Retailing evolution research: Introduction to the special section on retailing research

Five articles were selected from studies presented at the Ninth Society for Marketing Advances Retailing Research Symposium. The following article introduces their themes and main findings, along with the process of selection.     

Capital income taxation when inherited wealth is not observable

This paper extends the Atkinson-Stiglitz model of direct and indirect taxation to a dynamic setting with two unobservable characteristics: productive ability and inherited wealth. Bequests are motivated by the ‘joy of giving’. A child’s inheritance is a random variable with a probability distribution that depends on his parent’s investment in a ‘bequest technology’. Public borrowing is assumed and implies the modified golden rule. We study the optimal tax policy when two instruments are available: a non-linear (wage) income tax and a proportional tax on capital income. We show that the second instrument ought, in general, to be used but that the tax rate is not necessarily positive. However, a positive tax rate is more likely when there is a positive correlation between inherited wealth and innate ability.     

The effects of background music on consumers' desire to affiliate in buyer-seller interactions

The effect of music-induced pleasure and arousal on consumers' desire to affiliate in buyer-seller interactions were investigated in the context of bank services. Background music was manipulated using classical music extracts pretested to vary in pleasure (low, moderate, and high) and arousal (low, moderate, and high) according to the Affect Grid (Russell, Weiss, & Mendelsohn, 1989). Independent and interactive effects of music-induced pleasure and arousal on consumers' desire to affiliate were found. Higher desire to affiliate was associated with more pleasure and more arousal; pleasure had a stronger positive impact under low and high arousal than under a moderate level, and arousal had a stronger effect under low and high pleasure compared to moderate level. Theoretical and practical implications of the results are provided. © 1995 John Wiley & Sons, Inc.     

Does a companion always enhance the shopping experience?

Shopping is inherently a social experience. Extant research has shown that shopping with someone enhances the overall shopping experience. Interestingly, little research qualifies the shopping companion effect. Here, we take into account just who the other person is as well as the level of identification that a shopper has with the shopping environment (high vs. low identification). This study shows limits to the classical effects (shopping with somebody is better) because the improved reactions when shopping with a family member are evident only when the consumer has a low level of identification. However, when the consumer identifies highly with a shopping environment, s/he finds more enjoyment and value shopping alone than with a family member. The results are consistent with theory suggesting consumers will act to protect a preferred experience.     

Actuarial pricing of deposit insurance

Using a pricing formula for options on coupon bonds (Jamshidian [1989], El Karoui and Rochet [1990]) we are able to compute the actuarial pricing of deposit insurance for a commercial bank. Our formula takes into account the maturity structure of the bank's balance sheet, as well as market parameters such as the term structure of interest rates and the volatilities of zero coupon bonds. The relation with asset liability management methods is explored.     

An Optimal IPO Mechanism

We analyse the optimal Initial Public Offering (IPO) mechanism in a multidimensional adverse selection setting where institutional investors have private information about the market valuation of the shares, the intermediary has private information about the demand, and the institutional investors and intermediary collude. Theorem 1 states that uniform pricing is optimal (all agents pay the same price) and characterizes the IPO price in terms of conditional expectations. Theorem 2 states that the optimal mechanism can be implemented by a non-linear price schedule decreasing in the quantity allocated to retail investors. This is similar to IPO procedures used in the U.K. and France. Relying on French IPO data we perform a GMM structural estimation and test of the model. The price schedule is estimated and the conditions characterizing the optimal mechanism are not rejected.     

Beyond the Stern Review: Lessons from a risky venture at the limits of the cost-benefit analysis

This paper argues that debates amongst economists triggered by the Stern Review are partly relevant, focusing on key parameters translating real ethical issues, and partly misplaced in that they do not consider enough other determinants of climate change damages: i) the specifications of the utility function used for the assessments (preference for the environment, preference for smooth growth paths), ii) the interplay between uncertainty and the sequentiality of the decision, and iii) whether the growth engines behind the integrated assessment models can account for transient disequilibrium and sub-optimality. We derive some suggestions for any future research agenda in integrated assessment modelling, whatever the position of the analysts about the relevance of the intertemporal optimisation framework and the Bayesian approach to uncertainty in the climate affair.