Managers are responsible for planning, controlling, and revising projects. As a project unfolds, the manager evaluates the project's progress by comparing ongoing costs and scope to a baseline plan, and considers potential revisions. We offer a general model of managerial mental accounting, which includes loss aversion, reference point updating, and narrow framing; and examine how it impacts downstream decisions. Our model predicts insufficient adjustments of project scope and cost at revisions, resulting in reduced financial profit. Loss aversion is harmful but only up to a point; and reference point updating may lessen or worsen insufficient adjustments. We show that the choice of measure to quantify the project progress---planned, actual, or earned---affects the updating of the reference point, and hence the downstream decisions. Thus, such supposedly irrelevant factor could be wisely employed to mitigate insufficient adjustments. It turns out that planned scope is often advantageous, whereas earned value for cost is never advisable.
{"title":"Managerial Mental Accounting and Downstream Project Decisions","authors":"Manel Baucells, Y. Grushka-Cockayne, W. Hwang","doi":"10.2139/ssrn.3265724","DOIUrl":"https://doi.org/10.2139/ssrn.3265724","url":null,"abstract":"Managers are responsible for planning, controlling, and revising projects. As a project unfolds, the manager evaluates the project's progress by comparing ongoing costs and scope to a baseline plan, and considers potential revisions. We offer a general model of managerial mental accounting, which includes loss aversion, reference point updating, and narrow framing; and examine how it impacts downstream decisions. Our model predicts insufficient adjustments of project scope and cost at revisions, resulting in reduced financial profit. Loss aversion is harmful but only up to a point; and reference point updating may lessen or worsen insufficient adjustments. We show that the choice of measure to quantify the project progress---planned, actual, or earned---affects the updating of the reference point, and hence the downstream decisions. Thus, such supposedly irrelevant factor could be wisely employed to mitigate insufficient adjustments. It turns out that planned scope is often advantageous, whereas earned value for cost is never advisable.","PeriodicalId":10477,"journal":{"name":"Cognitive Social Science eJournal","volume":"24 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-10-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85086251","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We consider a general model of boundedly rational opinion formation in social networks. We show that long run opinions are extremely vulnerable to unilateral subtle manipulation. For a given updating system, any agent can drive the long run opinions of all agents to an arbitrary desired opinion, by infinitesimally perturbing his updating behavior. However, when opinion formation is monitored, then as the perturbation goes to zero so does the extend to which long run opinions can be manipulated without detection. Finally, we show that asymptotic consensus is a robust outcome of boundedly rational opinion formation while naive learning and social influence are not.
{"title":"Manipulating Opinions in Social Networks","authors":"Manuel Mueller-Frank","doi":"10.2139/ssrn.3080219","DOIUrl":"https://doi.org/10.2139/ssrn.3080219","url":null,"abstract":"We consider a general model of boundedly rational opinion formation in social networks. We show that long run opinions are extremely vulnerable to unilateral subtle manipulation. For a given updating system, any agent can drive the long run opinions of all agents to an arbitrary desired opinion, by infinitesimally perturbing his updating behavior. However, when opinion formation is monitored, then as the perturbation goes to zero so does the extend to which long run opinions can be manipulated without detection. Finally, we show that asymptotic consensus is a robust outcome of boundedly rational opinion formation while naive learning and social influence are not.","PeriodicalId":10477,"journal":{"name":"Cognitive Social Science eJournal","volume":"15 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-10-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83360857","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We quantify the implications of voter bias and electoral competition for politicians’ gender composition. Unfavorable voters’ attitudes toward women and local gender earnings gap correlate negatively with the share of female candidates in Parliamentary elections. Using within-candidate variation across the different polling stations of an electoral district in a given election year, we find that female candidates obtain fewer votes in municipalities with higher gender earnings gaps. We show theoretically that when voters are biased against women, parties facing gender quotas select male candidates in the most contestable districts. We find empirical support for such a strategic party response to voter gender bias. Simulating our calibrated model confirms that competition significantly hinders the effectiveness of gender quotas.
{"title":"Electoral Competition, Voter Bias and Women in Politics","authors":"Thomas Le Barbanchon, Julien Sauvagnat","doi":"10.2139/ssrn.3270570","DOIUrl":"https://doi.org/10.2139/ssrn.3270570","url":null,"abstract":"\u0000 We quantify the implications of voter bias and electoral competition for politicians’ gender composition. Unfavorable voters’ attitudes toward women and local gender earnings gap correlate negatively with the share of female candidates in Parliamentary elections. Using within-candidate variation across the different polling stations of an electoral district in a given election year, we find that female candidates obtain fewer votes in municipalities with higher gender earnings gaps. We show theoretically that when voters are biased against women, parties facing gender quotas select male candidates in the most contestable districts. We find empirical support for such a strategic party response to voter gender bias. Simulating our calibrated model confirms that competition significantly hinders the effectiveness of gender quotas.","PeriodicalId":10477,"journal":{"name":"Cognitive Social Science eJournal","volume":"97 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73230346","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study experimentally if lying is persistent. In a strategic game, we manipulate the incentives to lie to others. Some participants are first exposed to high incentives and then lower incentives; for others the reverse. We conjectured that participants will lie more often when the incentives are high, and will continue to lie when the incentives are then reduced. Contrary to our expectation, we do not find any such persistence in behavior, and there even seems to be an overcompensation effect: participants formerly exposed to high incentives are less likely to lie when confronted with lower incentives than participants who were never exposed to high incentives. The overcompensation is still present (but not statistically significant) after correcting for a general time trend.
{"title":"The Persistence of Lying","authors":"M. Belot, Jeroen van de Ven","doi":"10.2139/ssrn.3256702","DOIUrl":"https://doi.org/10.2139/ssrn.3256702","url":null,"abstract":"We study experimentally if lying is persistent. In a strategic game, we manipulate the incentives to lie to others. Some participants are first exposed to high incentives and then lower incentives; for others the reverse. We conjectured that participants will lie more often when the incentives are high, and will continue to lie when the incentives are then reduced. Contrary to our expectation, we do not find any such persistence in behavior, and there even seems to be an overcompensation effect: participants formerly exposed to high incentives are less likely to lie when confronted with lower incentives than participants who were never exposed to high incentives. The overcompensation is still present (but not statistically significant) after correcting for a general time trend.","PeriodicalId":10477,"journal":{"name":"Cognitive Social Science eJournal","volume":"104 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-09-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75976035","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Present bias is an important term in behavioral finance that is derived from the concept of self-control. Empirical research finds that present bias is associated with undesirable spending, borrowing, and saving behavior. Unlike previous research that focuses on one domain of financial behavior, the purpose of this study is to examine associations between present bias and a set of financial behaviors in various domains such as spending, borrowing, saving, and money management. With data from a national urban sample in China, results show that some behavioral patterns are consistent with theoretical predictions that present biased consumers are more likely to spend now and less likely to save. The findings have implications for further research of present bias to better understand this important concept and for financial advisors to better serve their clients.
{"title":"Present Bias and Financial Behavior","authors":"J. Xiao, Nilton Porto","doi":"10.2139/ssrn.3257093","DOIUrl":"https://doi.org/10.2139/ssrn.3257093","url":null,"abstract":"Present bias is an important term in behavioral finance that is derived from the concept of self-control. Empirical research finds that present bias is associated with undesirable spending, borrowing, and saving behavior. Unlike previous research that focuses on one domain of financial behavior, the purpose of this study is to examine associations between present bias and a set of financial behaviors in various domains such as spending, borrowing, saving, and money management. With data from a national urban sample in China, results show that some behavioral patterns are consistent with theoretical predictions that present biased consumers are more likely to spend now and less likely to save. The findings have implications for further research of present bias to better understand this important concept and for financial advisors to better serve their clients.","PeriodicalId":10477,"journal":{"name":"Cognitive Social Science eJournal","volume":"208 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-09-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77038026","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract: We contrast the impact of traditional news media and social media coverage on stock market volatility and trading volume. We develop a theoretical model of asset pricing and information processing, which allows for both rational traders and a variety of commonly studied behavioral biases. The model yields several novel and testable predictions about the impact of news and social media on asset prices. We then test the model’s theoretical predictions using a unique dataset which measures coverage of individual stocks in social and news media using a broad spectrum of print and online sources. Stocks with high social media coverage in one month experience high idiosyncratic volatility of returns and trading volume in the following month. Conversely, stocks with high news media coverage experience low volatility and low trading volume in the following month. These effects are statistically and economically significant and robust to controlling for stock and time fixed effects, as well as time-varying stock characteristics. The empirical evidence on news media is consistent with a market in which some traders are overconfident when interpreting new information. The evidence on social media is consistent with Tetlock (2011)’s “stale news” hypothesis (investors treat repeated information on social networks as though it were new) and with a model where investors’ perceptions are subject to random sentiment shocks.
{"title":"Social Media, News Media and the Stock Market","authors":"Peiran Jiao, Andre Veiga, A. Walther","doi":"10.2139/ssrn.2755933","DOIUrl":"https://doi.org/10.2139/ssrn.2755933","url":null,"abstract":"Abstract: We contrast the impact of traditional news media and social media coverage on stock market volatility and trading volume. We develop a theoretical model of asset pricing and information processing, which allows for both rational traders and a variety of commonly studied behavioral biases. The model yields several novel and testable predictions about the impact of news and social media on asset prices. We then test the model’s theoretical predictions using a unique dataset which measures coverage of individual stocks in social and news media using a broad spectrum of print and online sources. Stocks with high social media coverage in one month experience high idiosyncratic volatility of returns and trading volume in the following month. Conversely, stocks with high news media coverage experience low volatility and low trading volume in the following month. These effects are statistically and economically significant and robust to controlling for stock and time fixed effects, as well as time-varying stock characteristics. The empirical evidence on news media is consistent with a market in which some traders are overconfident when interpreting new information. The evidence on social media is consistent with Tetlock (2011)’s “stale news” hypothesis (investors treat repeated information on social networks as though it were new) and with a model where investors’ perceptions are subject to random sentiment shocks.","PeriodicalId":10477,"journal":{"name":"Cognitive Social Science eJournal","volume":"51 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-09-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76915989","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Models of consumer decision making often condition on attention to the different offers or alternatives to choose from. However, in many environments offers not only compete through their utility but also for the attention of decision makers. In this case, it is important to distinguish between attention and utility - it makes a difference whether an offering is overlooked, or rejected conditional on awareness - for optimal marketing control and empirical measures of competition. We show how discrete-continuous choices, in contrast to multinomial choices, facilitate the empirical distinction between attention and utility, and more generally the identification of two-stage decision models. In our illustrative application we analyze choices from simulated store shelves. We find that the number of facings of a brand on the shelf influence attention to, but not utility from the brand. We then formulate a parametric model that identifies attention based considerations sets and document clearly misleading inferences from a model that ignores attention and motivates choices from utility only.
{"title":"On the Distinction between Consideration and Utility","authors":"Keyvan Dehmamy, Thomas Otter","doi":"10.2139/ssrn.2433145","DOIUrl":"https://doi.org/10.2139/ssrn.2433145","url":null,"abstract":"Models of consumer decision making often condition on attention to the different offers or alternatives to choose from. However, in many environments offers not only compete through their utility but also for the attention of decision makers. In this case, it is important to distinguish between attention and utility - it makes a difference whether an offering is overlooked, or rejected conditional on awareness - for optimal marketing control and empirical measures of competition. We show how discrete-continuous choices, in contrast to multinomial choices, facilitate the empirical distinction between attention and utility, and more generally the identification of two-stage decision models. In our illustrative application we analyze choices from simulated store shelves. We find that the number of facings of a brand on the shelf influence attention to, but not utility from the brand. We then formulate a parametric model that identifies attention based considerations sets and document clearly misleading inferences from a model that ignores attention and motivates choices from utility only.","PeriodicalId":10477,"journal":{"name":"Cognitive Social Science eJournal","volume":"42 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-08-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90825917","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We introduce the experimental mobbing game. Each player in a group has the option to nominate one of the other players or to nominate no one. If the same person is nominated by all other players, he loses his payoff and the mob gains. We conduct three sets of experiments to study the effects of monetary gains, fear of being mobbed, and different types of focality. In the repeated mobbing game, we find that subjects frequently coordinate on selecting a victim, even for modest gains. Higher gains make mobbing more likely. We find no evidence that fear of becoming the victim explains mobbing. Richer and poorer players are equally focal. Pity plays no role in mobbing decisions. Ingroup members – introduced by colours – are less likely to be victims, and both payoff difference and colour difference serve as strong coordination devices. Commonly employed social preference theories do not explain our findings.
{"title":"How to Choose Your Victim","authors":"K. Abbink, G. Doğan","doi":"10.2139/ssrn.2788862","DOIUrl":"https://doi.org/10.2139/ssrn.2788862","url":null,"abstract":"We introduce the experimental mobbing game. Each player in a group has the option to nominate one of the other players or to nominate no one. If the same person is nominated by all other players, he loses his payoff and the mob gains. We conduct three sets of experiments to study the effects of monetary gains, fear of being mobbed, and different types of focality. In the repeated mobbing game, we find that subjects frequently coordinate on selecting a victim, even for modest gains. Higher gains make mobbing more likely. We find no evidence that fear of becoming the victim explains mobbing. Richer and poorer players are equally focal. Pity plays no role in mobbing decisions. Ingroup members – introduced by colours – are less likely to be victims, and both payoff difference and colour difference serve as strong coordination devices. Commonly employed social preference theories do not explain our findings.","PeriodicalId":10477,"journal":{"name":"Cognitive Social Science eJournal","volume":"50 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-08-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87839504","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-07-16DOI: 10.6007/IJARBSS/V8-I6/4249
T. Cham, T. Lau, David Ching Yat Ng
Consumers’ purchasing behaviors and their post-purchase outcomes are considered a significant aspects of consumer research. It was acknowledged that accessing consumers’ purchasing behavior can have great impact on business profitability and sustainability in the long run. Hence, the aim of this study is to identify and highlight the importance of customer characteristics and marketing stimuli (e.g. product packaging, broad assortment, prominent display and price promotion) on customers’ purchase behavior towards Ready-to-Drink (RTD) products in the Malaysian context. A total of 380 customers from across several hypermarkets in Klang Valley, Malaysia completed the survey questionnaire. The data collected was further analyzed with SEM-AMOS. Findings from the structural analysis indicated that customer characteristic and the elements in marketing stimuli (price promotion, prominent display, broad assortment and product packaging) have significant positive direct effect on consumer impulse purchase behavior.
{"title":"How Susceptible are Consumers in Impulse Purchasing Ready-to-Drink Products? Evidence from Malaysia","authors":"T. Cham, T. Lau, David Ching Yat Ng","doi":"10.6007/IJARBSS/V8-I6/4249","DOIUrl":"https://doi.org/10.6007/IJARBSS/V8-I6/4249","url":null,"abstract":"Consumers’ purchasing behaviors and their post-purchase outcomes are considered a significant aspects of consumer research. It was acknowledged that accessing consumers’ purchasing behavior can have great impact on business profitability and sustainability in the long run. Hence, the aim of this study is to identify and highlight the importance of customer characteristics and marketing stimuli (e.g. product packaging, broad assortment, prominent display and price promotion) on customers’ purchase behavior towards Ready-to-Drink (RTD) products in the Malaysian context. A total of 380 customers from across several hypermarkets in Klang Valley, Malaysia completed the survey questionnaire. The data collected was further analyzed with SEM-AMOS. Findings from the structural analysis indicated that customer characteristic and the elements in marketing stimuli (price promotion, prominent display, broad assortment and product packaging) have significant positive direct effect on consumer impulse purchase behavior.","PeriodicalId":10477,"journal":{"name":"Cognitive Social Science eJournal","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-07-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81707083","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Cultural grounds, semiotic structure, communicative functions and targeting in a teaser-advertising message are considered.
对挑逗广告信息的文化基础、符号结构、交际功能和目标进行了分析。
{"title":"Teaser Advertising of Drugs and Medications and Potential Users Targeting","authors":"I. Smirnova, E. Kozlov","doi":"10.2139/ssrn.3213299","DOIUrl":"https://doi.org/10.2139/ssrn.3213299","url":null,"abstract":"Cultural grounds, semiotic structure, communicative functions and targeting in a teaser-advertising message are considered.","PeriodicalId":10477,"journal":{"name":"Cognitive Social Science eJournal","volume":"89 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-07-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85794266","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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