Game theory and the practice of bargaining

This article seeks to examine the insights for practice that can be obtained from the recent work in explicit, extensive-form models of bargaining. I discuss the results of the theory and compare them to the advice often given to practitioners. Also included are sections on criticisms of these models and possible responses.     

Accommodating the effects of brand unfamiliarity in the multidimensional scaling of preference data

This paper presents a multidimensional scaling (MDS) methodology (vector model) for the spatial analysis of preference data that explicitly models the effects of unfamiliarity on evoked preferences. Our objective is to derive a joint space map of brand locations and consumer preference vectors that is free from potential distortion resulting from the analysis of preference data confounded with the effects of consumer-specific brand unfamiliarity. An application based on preference and familiarity ratings for ten luxury car models collected from 240 consumers who intended to buy a luxury car within a designated time frame is presented. The results are compared with those obtained from MDPREF, a popular metric vector MDS model used for the scaling of preference data. In particular, we find that the consumer preference vectors obtained from the proposed methodology are substantially different in orientation from those estimated by the MDPREF model. The implications of the methodology are discussed.The authors gratefully acknowledge helpful comments from the editor and two anonymous reviewers, and also from Michael D. Johnson and Robert J. Meyer. They also thank Michael Kusnick and Robert Kleinbaum for their assistance in conducting the survey.     

Cobranding arrangements and partner selection: a conceptual framework and managerial guidelines

Cobranding, the strategy of marketing brands in combination, has received increasing attention from academics and practitioners alike. This study examines two cobranding decisions facing a firm: the cobranding structure and the selection of a partner. Propositions rooted in the theories of attribution and categorization posit (a) how the levels of cobranding integration, exclusivity, and duration influence brand evaluation and consideration and (b) how consistency with the partner brand in hedonic attributes, complementarity in functional attributes, and brand breadth moderate the effect of partnership structure. Higher integration or longer duration likely has a greater impact on evaluation and consideration; an exclusive arrangement has a greater effect on evaluation but lowers consideration. For managers, these propositions are directly applicable; the outcomes of brand evaluation and consideration map onto the strategic goals of brand development and market development, respectively.     

An examination of determinants influencing the desire for and frequency of part-day and whole-day homeworking

This paper presents findings and analysis based upon the third wave of a national longitudinal survey in the UK which is examining part-day homeworking and comparing it with whole-day homeworking. Survey results confirm earlier findings that there is a higher incidence, amongst full-time paid employees, of part-day homeworking than whole-day homeworking. The paper then separately examines determinants of the desire to part-day homework and whole-day homework and determinants of the reported frequency of part-day homeworking and whole-day homeworking. The determinants considered are socio-demographic characteristics of the respondents and belief statements relating to homeworking. Four statements are found to be relevant to desire to part-day and to whole-day homework: avoiding interruptions at work; avoiding wasted time in traffic; other household members appreciating the employee homeworking; and working longer hours. A similar comparison concerning actual frequency of homeworking finds that employer support is relevant for both homeworking practices, with part-day homeworking being associated with avoiding interruptions at work and whole-day homeworking frequency also being associated with commute struggle. For both forms of working practice, the belief statements are better able to explain desire to homework (more) than to explain frequency of homeworking. This is perhaps not surprising given the variability of work patterns at the level of the individual that can occur from week-to-week. The better performance of desire models for whole-day homeworking compared to those for part-day homeworking suggest that other factors are at play that remain to be identified in future examination of part-day homeworking.     

Infrastructure provision and macroeconomic performance

This paper studies the differences between private and government provision of infrastructure. Capital utilization decisions and their differential role in determining market prices for capital goods under the two regimes of infrastructure provision serve as a critical transmission mechanism for fiscal policy. A subsidy to private providers of infrastructure is preferable to direct government provision irrespective of how the subsidy or expenditure is financed. The case for private provision is much stronger in economies characterized by high levels of congestion. The choice between private and government provision also has a crucial effect on the design of optimal fiscal policy.     

Does Increased Equity Ownership Lead to More Strategically Involved Boards?

According to Jay Lorsch, boards will be increasingly expected to exercise more leadership, even strategic leadership, in the running of a firm. In order to align directors to the best interest of the firm, directors are increasingly required to purchase the equity of the companies on whose board they serve, and in the majority of cases, the minimum shareholding is 1000 shares. The rationale for this is that the directors will take the perspective of real owners of the company, partly based on a study by the National Association of Corporate Directors in 1995. Using behavioral economics, this paper makes some counterintuitive predictions about how involved boards are likely to react to an offer for a hostile takeover. By studying their reactions, the paper inductively analyzes the use of equity ownership as an incentive mechanism.     

Manufacturers’ reliance on channel intermediaries: Value drivers in the presence of a direct web channel

Channel intermediaries constitute a key marketing asset, enabling manufacturers to reach out to and serve end-users or customers. The manufacturer-intermediary relationship has to create value for and deliver it to the end-user. In this process manufacturers and intermediaries add value to each other. Drawing upon the Governance Value Analysis (GVA) framework, this paper focuses on the manufacturer's perspective of value contributed by themselves and their intermediaries. The research setting is a multi-channel context where the manufacturer employs a direct web site for marketing in addition to the intermediary channel. We find that relational investments in intangible assets such as training and operating procedures by manufacturers in intermediaries, and intermediary investments in their end-customer relationships, increase manufacturers’ reliance on intermediaries even when the manufacturer has its own direct web site. Further, regardless of having their own website, manufacturers’ reliance on intermediaries increases with the web competence of their intermediaries. In addition, we find that, to the extent that the manufacturer's direct web site can perform the same functions as the intermediaries, manufacturer reliance on its intermediaries decreases. Surprisingly, manufacturers whose web sites have e-commerce transaction facility, rely on intermediaries more than those manufacturers whose web sites do not have this facility. Finally, the study finds that manufacturers’ reliance on intermediaries has increased over time despite their direct web channels, probably due to market growth opportunities. Overall, our study findings showcase the complementary role played by manufacturers’ web sites and intermediaries in serving their end customers in growth markets.