Consumer understanding of food labels: toward a generic tool for identifying the average consumer

The ‘average consumer’ is referred to as a standard in regulatory contexts when attempts are made to benchmark how consumers are expected to reason while decoding food labels. An attempt is made to operationalize this hypothetical ‘average consumer’ by proposing a tool for measuring the level of informedness of an individual consumer against the national median at any time. Informedness, i.e. the individual consumer's ability to interpret correctly the meaning of the words and signs on a food label is isolated as one essential dimension for dividing consumers into three groups: less-informed, informed, and highly informed consumers. Consumer informedness is assessed using a 60-question test related to information found on a variety of Danish everyday food products and divided into factual questions and informedness about signpost labels. A test was made with 407 respondents who participated in four independent studies on fairness in consumer communication, and the average score for all was 57.6% of correct answers. A score of 64% and beyond would place a consumer in the upper quartile (the group of highly informed consumers), whereas a score of 52% or below would place the individual in the lower quartile (the group of less-informed consumers). Female respondents performed better than males on label recognition, and those around 40 years of age irrespective of gender performed best on factual knowledge, whereas those aged around 30 performed best on label recognition. It is foreseen that independent future studies of consumer behavior and decision making in relation to food products in different contexts could benefit from this type of benchmarking tool.     

Anchor Points, Reference Points, and Counteroffers in Negotiations

Based on the theoretical assumptions that counteroffers are generated through an anchoring-and-adjustment process and that offers are perceived as gains or losses relative to a reference point, predictions were made of how, in a price negotiation, the size of counteroffers vary with proposed selling prices and reservation prices. The predictions were confirmed in two experiments. In Experiment 1, 64 undergraduate students of business administration playing the role of buyers of condominiums were presented proposed selling prices and asked to give a counteroffer which a hypothetical seller would accept or reject. A reference point was induced by telling subjects their reservation price. Before giving a counteroffer subjects were asked to indicate whether it was higher or lower than an arbitrary anchor point. In four different groups of subjects, high vs. low reference point was crossed with high vs. low anchor point. The results showed as expected that the counteroffers were higher for a high than for a low anchor point, and higher for a high reference point when the anchor point was perceived as a gain than for a low reference point when the anchor point was perceived as a loss. In Experiment 2 in which another 48 undergraduate students of business administration participated, the anchor points were the proposed selling prices and the reference point (reservation price) was manipulated by providing estimates of the market price. The results were as predicted, thus suggesting that the proposed selling prices operated as anchor points and that the estimated market prices affected the reservation prices (reference points) so that the selling prices and estimated market prices jointly affected the counteroffers.     

Multinationals, Endogenous Growth, and Technological Spillovers: Theory and Evidence*

FDI has received surprisingly little attention in theoretical and empirical work on openness and growth. This paper presents a theoretical growth model where MNCs directly affect the endogenous growth rate via technological spillovers. This is novel since other endogenous growth models with MNCs, e.g. the Grossman–Helpman model, assume away the knowledge‐spillovers aspect of FDI. We also present econometric evidence (using industry‐level data from seven OECD nations) that broadly supports the model. Specifically, we find industry‐level scale effects and international knowledge spillovers that are unrelated to FDI, but we also find that bilateral spillovers are boosted by bilateral FDI.     

International monetary policy cooperation in economies with centralized wage setting

We consider a standard two-country monetary policy game with fixed nominal wage contracts. The policy regime is either non-cooperative or cooperative. We extend conventional analyses by deriving the natural rate of employment endogenously through monopoly union decision-making. As unions attempt to affect the real exchange rate, wages are set inefficiently high. Such attempts are shown to be strongest under monetary cooperation. Therefore, in comparison with non-cooperation, employment is lowest, and, in effect, consumer price inflation is highest, under monetary cooperation, i.e., international monetary cooperation is disadvantageous.     

Monetary Policy Cooperation May Not Be Counterproductive

This paper qualifies Rogoff's famous (1985) result that international monetary policy cooperation is counterproductive. In a model similar to his, it is shown that if wage-setters are non-atomistic and inflation averse — as policymakers are — cooperation leads to higher employment and possibly lower inflation.     

Results-Oriented Trade Policy

We construct a model of economic policy determination by an executive who controls a domestic policy instrument and who can influence, but not completely control, the conduct of trade policy. The executive exploits a polictical linkage between the policies. These circumstances can motivate implementation of a results-oriented trade policy by the government of a trading partner. We analyze the implications of such a policy under alternative situations.     

A matrix-based industrial location model

Experience with earlier interview-type location studies is employed as a basis for an ‘improved’ matrix model for the external location factors affecting industrial undertakings. The model enables the relative advantage of potential locations for industry to be determined, and the most appropriate branches of industry to be assigned to each region.     

On the foundation of agricultural policy research in the United States

This paper identifies three scientific research programs in agricultural economics. The farm management approach (1870-1933), the farm problem approach (1933-1982) and the domestic and global welfare approach (1982-). In respect to agricultural policy research two competitive research programs developed out of the farm crisis of the 1920s. One program argued for government intervention in agriculture. The other argued for stability in the general economy. The former program degenerated during the 1970s because of countervailing empirical evidence and a change in the understanding of positive economics. The latter program stayed progressive by adding the international dimension and by applying welfare economic analysis. Two other important factors influenced the development of agricultural policy. First, the unique institutional set up of the land grant system in which agricultural economics was founded as an applied science with a bias to help farmers. Second, the convergence of agricultural economics towards general economics that shifted the approach from applied to basic.     

Creating value through mutual commitment to business network relationships

A structural model of business relationship development in a business network context is formulated and tested on data from the European International Marketing and Purchasing (IMP) project. The empirical analysis demonstrates a causal chain from business network connection through mutual commitment and mutual dependence to value creation in the relationship. The results show that mutuality in business network relationships is critical in developing interfirm systems of workflow interdependence that promote the creation of value. This also implies that, through their interaction in business network relationships, firms in business markets organize and share an unbounded structure of interdependent activities, enabling them to achieve greater value than would be the case if they did not engage in relationship development. Copyright © 1999 John Wiley & Sons, Ltd.     

Generalized extreme value discrete choice demand models : Existence and uniqueness of market equilibria

Generalized extreme value (GEV) random utility choice models have been suggested as a development of the multinomial logit models that allows the random components of various alternatives to be statistically dependent. This paper establishes the existence of and provides necessary and sufficient uniqueness conditions for the solutions to a set of equations that may be interpreted as an equilibrium of an economy, the demand side of which is described by a multiple-segment GEV random choice model. The same equations may alternatively be interpreted in a maximum likelihood estimation context. The method employed is based on optimization theory and may provide a useful computational approach. The uniqueness results suggest a way to introduce segregation/integration effects into logit type choice models. Generalization to non-GEV models are touched upon.