Utilitarian and hedonic shopping value in the US discount sector

General merchandise discount retailers in the US have evolved to offer higher levels of hedonic shopping value, thereby intensifying levels of intra- and inter-type competition within the industry. Academic research on consumer reactions to these efforts is limited. This study investigates consumers’ perceptions of utilitarian and hedonic shopping value associated with the two leading US general merchandise discounters. Findings suggest differences in perceptions of the level of hedonic benefits offered by the discounters and provide useful insight for the further development of marketing strategies.     

Valuing seasonal climate forecasts in a state‐contingent manner

We applied state‐contingent theory to climate uncertainty at a farm level to assess the value of seasonal climate forecasts in the Central West region of NSW. We find that modelling uncertainty in a state‐contingent manner results in a lower estimate of forecast value than the typical expected value approach. We attribute this finding to a more conservative long‐term farm plan in the discrete stochastic programming (DSP) model, which is better balanced for climate uncertainty. Hence, a climate forecast, even though it still revises probabilities held by farmers, does not call forth such large changes in farm plans and associated farm incomes. We then use the DSP model to assess how attributes of a hypothetical forecasting system, particularly its skill and timeliness, as well as attributes of the decision environment, influence its value. Lastly, we assess the value of current operational forecast systems and show that the value derived from seasonal climate forecasts is relatively limited in the case study region largely because of low skill embodied in forecasts at the time when major farm decisions are being made.     

Athlete Pay and Competitive Balance in College Athletics

In this paper we analyze the argument—which has been used by both the National Labor Relations Board and the National Collegiate Athletic Association—that unionization and/or player pay will hurt competitive balance in college sports. We present a theoretical analysis of universities that recruit athletes and examine the assumptions that are needed for player compensation to decrease competitive balance. We also empirically illustrate the differences in balance between professional and college sports. Given the theoretical and empirical analysis, we argue that unionization and/or player pay is unlikely to hurt competitive balance.     

Economics at the FTC: Non-price Merger Effects and Deceptive Automobile Ads

Economists at the Federal Trade Commission analyze a wide range of activities, practices, and policies in support of the agency’s consumer protection and competition missions as demonstrated by the two economic analyses discussed in this article. The first section of this article describes the economic analysis of a proposed merger’s impact on non-price dimensions of competition in the daily fantasy sports market. The second section builds an economic model to quantify the harm to consumers from deceptive advertising in automobile markets.     

Friends or foes? Target selection decisions of sovereign wealth funds and their consequences

This paper examines investment strategies of sovereign wealth funds (SWFs), their effect on target firm valuation, and how both of these are related to SWF transparency. We find that SWFs prefer large and poorly performing firms facing financial difficulties. Their investments have a positive effect on target firms' stock prices around the announcement date but no substantial effect on firm performance and governance in the long run. We also find that transparent SWFs are more likely to invest in financially constrained firms and have a greater impact on target firm value than opaque SWFs. Overall, SWFs are similar to passive institutional investors in their preference for target characteristics and in their effect on target performance, and SWF transparency influences SWFs' investment activities and their impact on target firm value.     

Wealth portfolios and elite professional athletes

Defined contribution pension plans typically rely on some type of lifecycle allocation investment strategy. This approach has recently been shown to be sub-optimal due to the portfolio size effect. The terminal wealth of individuals with steadily increasing earnings over time is significantly less when using a lifecycle strategy compared with a simple contrarian approach. The adverse effect of an inappropriate asset allocation strategy for investors with unorthodox earnings profiles, such as for professional athletes, can be greatly magnified. We demonstrate that strategies that exploit the portfolio size effect vastly dominates terminal wealth earned using lifecycle strategies for individuals who experience unorthodox earning profiles, particularly those generating high investable incomes early in life. While the lifecycle strategy contains some attractive features relating to risk aversion and diminishing utility from wealth, we demonstrate that for unorthodox earnings profiles the case for taking advantage of the portfolio size effect is particularly strong.     

Price Dispersion in Mortgage Markets

Using transaction‐level data on Canadian mortgage contracts, we document an increase in the average discount negotiated off the posted price and in rate dispersion. Our aim is to identify the beneficiaries of discounting and to test whether dispersion is caused by price discrimination. The standard explanation for dispersion in credit markets is risk‐based pricing. Our contracts are guaranteed by government‐backed insurance, so risk cannot be the main factor. We find that lenders set prices that reflect consumer bargaining leverage, not just costs. The presence of dispersion implies a lack of competition, but our results show this to be consumer specific.     

Cognitive Dimensions of Wilderness Privacy: An 18-Year Trend Comparison

In 1999, replication of a 1981 study was conducted as exactly as possible as the 1981 study, involving the same number of respondents ( n = 109), universities, recreation management classes, classroom-administered questionnaire, and data analysis. Cognitive states of privacy were measured using a 20-item scale, rated on a 7-point importance continuum. Trend analysis involved individual scale item and factor analysis comparisons between the 1981 versus 1999 data. Twelve of the 20 scale items were rated significantly different ( p h .05) over the 18-year period, with 11 of the 12 items rated higher by 1999 respondents. Today's students found cognitive aspects of freedom of choice concerning interactions, use of time and actions, rules/constraints of society, and everyday pressure/tensions more important than did 1981 students. The major factor differences between years were the following: The Intimacy factor increased in importance and was perceived more consistently (reliability alphas) in 1999 and Individualism changed the most of any factor in the dimension structure.     

Preference Learning in Consecutive Experimental Auctions

This paper explores the origins of the strikingly high price premia paid for new food products in lab valuation exercises. Our experimental design distinguishes between two explanations of this phenomenon: novelty of the experimental experience versus the novelty of the good, i.e., preference learning—bids reflect a person's desire to learn how an unfamiliar good fits into their preference set. Subjects bid in four consecutive experimental auctions for three goods that vary in familiarity, candy bars, mangos, and irradiated meat. Our results suggest that preference learning is the main source of the high premia, and that novelty of the experimental experience does not in itself artificially inflate valuations.     

Is the growth of regionalism as significant as the headlines suggest? Lessons from agricultural trade

The proliferation of regional trade agreements (RTAs) has motivated a significant number of ex post econometric studies investigating their agricultural trade impacts. The general conclusion is that RTAs increase members’ trade by as much as 150%, on average. In this article, we demonstrate that previous empirical work likely misrepresents the impact of RTAs because of considerable heterogeneity in the depth of economic integration pursued by these agreements. Contrary to previous studies, the results reveal that RTAs are not universally trade creating, and some agreements appear to provide very little benefit. “Deep integration agreements,” on the other hand, are largely responsible for the impressive agricultural trade flow increases reported in the literature. Testing the hierarchy of RTAs largely confirms the theory: the benefits of regionalism are an increasing function of the depth of economic integration.