Using performance-based warranties to influence consumer purchase decisions

Abstract

Traditional warranty analysis focuses on the reliability of a product and offers warranty designs that compensate a consumer if the item fails. We introduce the concept of a performance-based warranty (PBW) that guarantees that a product will operate at or above some baseline level of performance, such as a minimum energy efficiency for an appliance. We illustrate how consumer behavior can change in the presence of a PBW and define the parameters for which a manufacturer may increase revenue. Finally, we present an algorithm to solve for the optimal PBW design given a consumer’s belief about the expected performance of the product.     

Estimation of household preferences for long distance telecommunications carrier

The competitive environment in long-distance telecommunications markets changed considerably with the divestiture of AT&T in 1982. A variety of providers appeared, offering myriad services. In this environment, customer selection of preferred long-distance carrier became more complicated and more important.In this paper, we analyze and quantify the determinants of this choice. To our knowledge, this focus is distinct. By contrast, the literature to date has analyzed the behavioral determinants of calling volume (local and long-distance) and the selection of local service options.In our analysis, we allow the alternative carriers to differ in terms of tariffs, reputation, quality, access, and specialized customer services. We quantify the interactive effects of these carrier attributes and customer demographics upon the selection of carrier. Price and income elasticities are estimated. A distinguishing feature of our analysis is that it examines behavioral differences among households in equal-access and unequal-access areas. We find that households assured of the convenience of 1 + dialling for their chosen carrier in equal-access areas display more rational and sophisticated decision making. On the other hand, households in unequal-access areas display greater status quo effects in their decision making.     

Common factors can always be found but can they also be rejected?

Factor models are often used to reduce the complexity of data. It is simple to find common factors and to interpret them. However, it is doubtful whether factor models are always appropriate. Especially when the common factor is considered to be an attitude, it must be stable through time and explain a considerable part of the variances. A procedure is suggested to test the usefulness of a common factor. In an experimental pilot study in which an attitude towards immigrant workers was investigated, the instability and superfluousness of a common factor is shown. An alternative model is presented which suggests that changing opinions can be explained by specific variables. Finally it is shown that a more stable common factor is found if a so-called MIMIC-design is used.     

Credibility in Loss Reserving

This article proposes using credibility theory in the context of stochastic claims reserving. We consider the situation where an insurer has access to the claims experience of its peer competitors and has the potential to improve prediction of outstanding liabilities by incorporating information from other insurers. Based on the framework of Bayesian linear models, we show that the development factor in the classical chain-ladder setting has a credibility expression: a weighted average of the prior mean and the best estimate from the data. In the empirical analysis, we examine loss triangles for the line of commercial auto insurance from a portfolio of insurers in the United States. We employ hierarchical model for the specification of prior and show that prediction could be improved through borrowing strength among insurers based on a hold-out sample validation.     

Social Constructivism,Mental Models,and Problems of Obedience

There are important synergies for the next generation of ethical leaders based on the alignment of modified or adjusted mental models. This entails a synergistic application of moral imagination through collaborative input and critique, rather than “me too” obedience. In this article, we will analyze the Milgram results using frameworks relating to mental models (Werhane et al., Profitable partnerships for poverty alleviation, 2009), as well as work by Moberg on “ethics blind spots” (Organizational Studies 27(3):413–428, 2006), and by Bazerman and Chugh on “bounded awareness” (Harvard Business Review, 2006; Mind &; Society 6:1–18, 2007) Using these constructs to examine the Milgram experiment, we will argue that the ways in which the experiments are framed, the presence of an authority figure, the appeal to the authority of science, and the situation in which the naïve participant finds herself or himself, all create a bounded awareness, a narrow blind spot that encourages a climate for obedience, brackets out the opportunity to ask the moral question: “Am I hurting another fellow human being?” and may preclude the subject from utilizing moral imagination to opt out of the experiment. We will conclude that these forms of almost blind obedience to authority are correctable, but with difficulty. We will argue that linking the modification of mental models to an unbinding of awareness represents an important synergistic relationship and one that can build effectively on the lessons learned from our experience with moral imagination.     

Test validation from a conceptual and legal perspective: Issues and trends

A little-explored issue in the psychological and legal literature involves test validation. This article discusses issues of test validation from both psychological and legal perspectives. Areas of inconsistency are noted and probable future directions are high-lighted.     

The Communication of Corporate Social Responsibility: United States and European Union Multinational Corporations

This study explores corporate social responsibility (CSR) by conducting a cross-cultural analysis of communication of CSR activities in a total of 16 U.S. and European corporations. Drawing on previous research contrasting two major approaches to CSR initiatives, it was proposed that U.S. companies would tend to communicate about and justify CSR using economic or bottom-line terms and arguments whereas European companies would rely more heavily on language or theories of citizenship, corporate accountability, or moral commitment. Results supported this expectation of difference, with some modification. Specifically, results indicated that EU companies do not value sustainability to the exclusion of financial elements, but instead project sustainability commitments in addition to financial commitments. Further, U.S.-based companies focused more heavily on financial justifications whereas EU-based companies incorporated both financial and sustainability elements in justifying their CSR activities. In addition, wide variance was found in both the prevalence and use of specific CSR-related terminology. Cross-cultural distinctions in this use create implications with regard to measurability and evidence of both strategic and bottom-line impact. Directions for further research are discussed. Laura P. Hartman is a Professor of Business Ethics and Legal Studies in the Management Department in the College of Commerce at DePaul University, as Associate Vice President for Academic Affairs of the University and as Research Director of DePaul’s Institute for Business and Professional Ethics. She is also an invited professor at INSEAD (France), HEC (France), the University of Melbourne, the Université Paul Cezanne Aix Marseille III and the Grenoble Graduate School of Business. She has been published in, among other journals, Business Ethics Quarterly, Business & Society Review, Business Ethics: A European Review, and the Journal of Business Ethics. Robert S. Rubin is an Assistant Professor in the Management Department at DePaul University’s Kellstadt Graduate School of Business. He received his PhD in organizational psychology from Saint Louis University. His current research interests include transformational leadership, leader cynicism, social and emotional individual differences, and management education and development. K. Kathy Dhanda is an Associate Professor at the Department of Management at DePaul University. Her areas of research include sustainable supply chains, environmental networks, marketable permit modeling, sustainable management, and public policy.     

Sony Online Entertainment: EverQuest® or EverCrack? Oxford Style Debate Presented at Tenth Annual International Conference Promoting Business Ethics

Part C of this three part series is the presentation from the Oxford style debate held at the Tenth Annual International Conference Promoting Business Ethics between Laura Hartman, J.D., and Dr. Moses Pava on topics related to the EverQuest^? v. EverCrack case (Part B). In a traditional Oxford style debate, two debaters take opposing viewpoints and the third debater argues the neutral position. At the Conference, the modified format featured the two debaters presenting diametrically opposing views – corporate responsibility versus personal responsibility. This modified format was also used during the Ethics Awareness Week (Part A), with University professors presenting the debate before the student body. Ms. Hartman’s position focused on the personal responsibility by Mr Woolley while Dr. Pava opined that Sony Online Entertainment had corporate responsibility toward Mr. Woolley and all other individuals similarly situated.     

Procedural and Distributive Justice: Examining Equity in a University Setting

The concept of organizational justice is important to understanding and predicting organizational behavior. A significant development in the research literature has been the separation of distributive and procedural justice. While much of the research has focused on negative outcomes, this research attempted to verify the presence of both forms of justice in the context of positive outcomes. Subjects completed an instrument designed to measure their perceptions of distributive and procedural justice. The subjects also reported their satisfaction and sense of fairness with their salary increases, their belief that the procedures to award the increases had been followed, and their level of information and agreement regarding the salary program. These measures, along with size of salary increase and gender were examined to determine their impact on the subjects' perceived level of justice. The data support the existence of the two distinct forms of justice, but suggest that procedural justice may, in turn, branch out into two aspects. One category involves being informed, and a second appears to deal with acceptance of procedures. A series of relationships are then considered. Significant gender effects were non-existent.     

家具制造商因RFID而成功

尽管家具制造和进口商Victory Land Group不是Wal-Mart指定的前100家参与RFID的供货商,但已经成为自愿加入Wal-Mart由EPC技术开始的RFID标签计划的仅有的37家供货商之一.