Advancing consumer neuroscience

In the first decade of consumer neuroscience, strong progress has been made in understanding how neuroscience can inform consumer decision making. Here, we sketch the development of this discipline and compare it to that of the adjacent field of neuroeconomics. We describe three new frontiers for ongoing progress at both theoretical and applied levels. First, the field will broaden its boundaries to include genetics and molecular neuroscience, each of which will provide important new insights into individual differences in decision making. Second, recent advances in computational methods will improve the accuracy and out-of-sample generalizability of predicting decisions from brain activity. Third, sophisticated meta-analyses will help consumer neuroscientists to synthesize the growing body of knowledge, providing evidence for consistency and specificity of brain activations and their reliability as measurements of consumer behavior.     

The impact of customer-specific marketing expenses on customer retention and customer profitability

We study the effects of customer-specific marketing expenses on customer retention and customer profitability in a business-to-business setting. Using data from a company providing hygiene services, we look at the impact of a hitherto unstudied type of expense targeted at individual customer relationships: the offering of free equipment to customers. The data allow tracking the activities performed in more than 4,500 customer relationships over a period of 4 years. Retention rates are higher for customers targeted with free equipment, but this effect results from an interaction with customer size. First-order dynamic panel data analyses show that the impact of targeted marketing expenses on customer dollar profit is positive for large customers, but there is no effect for smaller customers. Thus, targeted marketing expenses seem to be a tool for relationship maintenance rather than customer development: they help in retaining large customers that generate more profit, but they do not seem to work in developing new customers into larger, more profitable ones.     

The Effect of Clustering on Office Rents: Evidence from the Amsterdam Market

This article examines the rent effects of office clustering in the Amsterdam office market for the period 2000–2005. We isolate the rent effects of location density based on geographic information system (GIS) methodology, while controlling for variations in object characteristics in a cross-sectional hedonic model. While controlling for the age, location and quality of the object, we find a strong positive effect of being located in dense office areas. We find that the vicinity of other office objects is priced into rent levels, regardless of market conditions. This article extends existing literature by examining the influence of clustering outside the United States, during changing economic tides and by application of novel methodology, based on objective clustering schemes, which can be replicated for other geographic areas.     

Coordinating unions,wages and employment

Summary In this paper we consider a two-sector economy in which individual unions are affiliated into a federation of unions. We analyze the consequences of two different types of wage setting. Firstly, individual unions set wages in their own sector without taking into account the effect of their wages on the employment level in the other sector. There may be positive as well as negative externalities. A positive (negative) externality may exist if a higher (lower) wage in one sector implies a higher level of employment in the other sector. Both cases may occur in our model. Secondly, wages in the two sectors are set by the federation of unions. We show that in this case higher (lower) wages result than in the first case if a positive (negative) externality exists.Preliminary versions of this paper were presented at seminars at the University of Oldenburg and the University of Groningen and the Fourth Annual Congress of the European Economic Association, Augsburg, September 2–4, 1989. The authors would like to thank W.H. Buiter, H. van Ees, J. Hartog, Th. v.d. Klundert, S.K. Kuipers, Chr. Mulder and T. van Veen for their comments on an earlier version of this paper.     

Tax Mimicking and Yardstick Competition Among Local Governments in the Netherlands

This paper provides a spatial-econometric analysis of the setting of property tax rates by Dutch municipalities. We find evidence of tax mimicking: a ten percent higher property tax rate in neighboring municipalities leads to a 3.5 percent higher tax rate. Mimicking is less pronounced in municipalities governed by coalitions backed by a large majority. This points to yardstick competition as the most likely source of tax mimicking. We also find that Dutch voters seem to be able to penalize incumbents for anticipated tax rate differentials, but not for unanticipated tax rate differentials. This limits the effectiveness of yardstick competition as a mechanism to reduce political rent-seeking.JEL Code: D72, H71     

Horizontal Product Differentiation: Disclosure and Competition

This paper studies firms' incentives to disclose horizontal product attributes in a competitive environment. With competition, two elements play an important role: whether (i) firms can disclose only their own product characteristics or also those of their competitors, and whether (ii) competitors can react with their pricing decisions to the type of information disclosed. In all possible cases, full revelation is an equilibrium outcome. More importantly, it is generically the unique equilibrium outcome when (i) advertising is comparative and (ii) prices are also advertised, that is, announced simultaneously with the product information. When advertising is noncomparative or prices are not advertised, many nondisclosure equilibria exist.     

An Eye for an Eye Will Make the Whole World Blind: Conflict Escalation into Workplace Bullying and the Role of Distributive Conflict Behavior

The current study investigated how work-related disagreements—coined as conflicts—relate to workplace bullying, from the perspective of the target as well as the perpetrator. We hypothesized a positive indirect association between task conflicts and bullying through relationship conflicts. This process accounted for both for targets and perpetrators of bullying. Targets are distinguished from perpetrators in our assumption that this indirect effect is boosted by distributive conflict behavior, being yielding for targets and forcing for perpetrators. Results in a large representative sample of the Flemish working population (N = 2,029) confirmed our hypotheses. Additionally, our study also revealed a direct effect from task conflicts to bullying in the analyses regarding the indirect as well as the conditional indirect effects. For perpetrators, both the indirect and direct relationships are moderated by forcing, underlining the importance of distributive conflict behavior particularly for the enactment of bullying behaviors.     

Identification, screening and stereotyping in labour market discrimination

According to social-psychological research, feelings of uncertainty in decision-making evoke two opposite responses: (i) reduction of uncertainty by information search, leading to less stereotyping of people, and hence less discrimination; (ii) social identification with an ingroup, inducing more reliance on stereotypic perceptions and prejudices, and hence more discrimination against an outgroup. We integrate both responses in a microeconomic model of hiring and pay decisions by an employer. Increasing competition in the product market makes the employer feel more uncertain about his profits, but also raises the opportunity cost of screening expenditures. This elicits substitution of ingroup identification for screening expenditures, and hence enhances discrimination.