Andrés Elberg, Pedro M. Gardete, Rosario Macera, Carlos Noton
This paper investigates the dynamic effects of price promotions in a retail setting through the use of a large-scale field experiment varying the promotion depths of 170 products across 17 categories in 10 supermarkets of a major retailer in Chile. In the intervention phase of the experiment, treated customers were exposed to deep discounts (approximately 30%), whereas control customers were exposed to shallow discounts (approximately 10%). In the subsequent measurement phase, the promotion schedule held discount levels constant across groups. We find that treated customers were 22.4% more likely to buy promoted items than their control counterparts, despite facing the same promotional deals. Strikingly, the magnitude of the dynamic effects of price promotions (when promotional depths are equal across conditions) is 61% of the promotional effects induced by offering shallow vs. deep discounts during the intervention phase. The result is robust to other concurrent dynamic forces, including consumer stockpiling behavior and state dependence. We use the experimental variation and historical promotional activities to inform a demand-side model in which consumers search for deals, and a supply-side model in which firms compete for those consumers. We find that small manufacturers can benefit from heightened promotion sensitivity by using promotions to induce future consideration. However, when unit margins are high, heightened promotion sensitivity leads to fierce competition, making all firms worse off.
{"title":"Dynamic effects of price promotions: field evidence, consumer search, and supply-side implications","authors":"Andrés Elberg, Pedro M. Gardete, Rosario Macera, Carlos Noton","doi":"10.2139/ssrn.2983193","DOIUrl":"https://doi.org/10.2139/ssrn.2983193","url":null,"abstract":"This paper investigates the dynamic effects of price promotions in a retail setting through the use of a large-scale field experiment varying the promotion depths of 170 products across 17 categories in 10 supermarkets of a major retailer in Chile. In the intervention phase of the experiment, treated customers were exposed to deep discounts (approximately 30%), whereas control customers were exposed to shallow discounts (approximately 10%). In the subsequent measurement phase, the promotion schedule held discount levels constant across groups. We find that treated customers were 22.4% more likely to buy promoted items than their control counterparts, despite facing the same promotional deals. Strikingly, the magnitude of the dynamic effects of price promotions (when promotional depths are equal across conditions) is 61% of the promotional effects induced by offering shallow vs. deep discounts during the intervention phase. The result is robust to other concurrent dynamic forces, including consumer stockpiling behavior and state dependence. We use the experimental variation and historical promotional activities to inform a demand-side model in which consumers search for deals, and a supply-side model in which firms compete for those consumers. We find that small manufacturers can benefit from heightened promotion sensitivity by using promotions to induce future consideration. However, when unit margins are high, heightened promotion sensitivity leads to fierce competition, making all firms worse off.","PeriodicalId":46425,"journal":{"name":"Qme-Quantitative Marketing and Economics","volume":"17 1","pages":"1-58"},"PeriodicalIF":1.9,"publicationDate":"2018-10-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2139/ssrn.2983193","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43614131","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-08-13DOI: 10.1007/s11129-018-9202-8
Z. Gu, Yunchuan Liu
{"title":"Why would a big retailer refuse to collaborate on manufacturer SPIFF programs?","authors":"Z. Gu, Yunchuan Liu","doi":"10.1007/s11129-018-9202-8","DOIUrl":"https://doi.org/10.1007/s11129-018-9202-8","url":null,"abstract":"","PeriodicalId":46425,"journal":{"name":"Qme-Quantitative Marketing and Economics","volume":"16 1","pages":"441 - 472"},"PeriodicalIF":1.9,"publicationDate":"2018-08-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1007/s11129-018-9202-8","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"52621488","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-08-09DOI: 10.1007/s11129-018-9201-9
Davide Proserpio, W. Xu, G. Zervas
{"title":"You get what you give: theory and evidence of reciprocity in the sharing economy","authors":"Davide Proserpio, W. Xu, G. Zervas","doi":"10.1007/s11129-018-9201-9","DOIUrl":"https://doi.org/10.1007/s11129-018-9201-9","url":null,"abstract":"","PeriodicalId":46425,"journal":{"name":"Qme-Quantitative Marketing and Economics","volume":"16 1","pages":"371 - 407"},"PeriodicalIF":1.9,"publicationDate":"2018-08-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1007/s11129-018-9201-9","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45615858","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We develop an analytical framework of peer interaction in the sharing economy that incorporates reciprocity, the tendency to increase (decrease) effort in response to others’ increased (decreased) effort. In our model, buyers (sellers) can induce sellers (buyers) to exert more effort by behaving well themselves. We demonstrate that this joint increased effort can improve the utility of both parties and influence the market equilibrium. We also show that bilateral reputation systems, which allow both buyers and sellers to review each other, are more responsive to reciprocity than unilateral reputation systems. By rewarding reciprocal behavior, bilateral reputation systems generate trust among strangers and informally regulate their behavior. We test the predictions of our model using data from Airbnb, a popular peer-to-peer accommodation platform. We show that Airbnb hosts that are more reciprocal receive higher ratings and that higher rated hosts can increase their prices. Therefore, reciprocity affects equilibrium prices on Airbnb through its impact on ratings, as predicted by our analytical framework.
{"title":"You get what you give: theory and evidence of reciprocity in the sharing economy","authors":"Davide Proserpio, W. Xu, G. Zervas","doi":"10.2139/ssrn.3203144","DOIUrl":"https://doi.org/10.2139/ssrn.3203144","url":null,"abstract":"We develop an analytical framework of peer interaction in the sharing economy that incorporates reciprocity, the tendency to increase (decrease) effort in response to others’ increased (decreased) effort. In our model, buyers (sellers) can induce sellers (buyers) to exert more effort by behaving well themselves. We demonstrate that this joint increased effort can improve the utility of both parties and influence the market equilibrium. We also show that bilateral reputation systems, which allow both buyers and sellers to review each other, are more responsive to reciprocity than unilateral reputation systems. By rewarding reciprocal behavior, bilateral reputation systems generate trust among strangers and informally regulate their behavior. We test the predictions of our model using data from Airbnb, a popular peer-to-peer accommodation platform. We show that Airbnb hosts that are more reciprocal receive higher ratings and that higher rated hosts can increase their prices. Therefore, reciprocity affects equilibrium prices on Airbnb through its impact on ratings, as predicted by our analytical framework.","PeriodicalId":46425,"journal":{"name":"Qme-Quantitative Marketing and Economics","volume":"16 1","pages":"371-407"},"PeriodicalIF":1.9,"publicationDate":"2018-06-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2139/ssrn.3203144","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42510027","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-06-13DOI: 10.1007/s11129-018-9199-z
Yan Chen, Youran Qi, Qing-jie Liu, Peter Chien
{"title":"Sequential sampling enhanced composite likelihood approach to estimation of social intercorrelations in large-scale networks","authors":"Yan Chen, Youran Qi, Qing-jie Liu, Peter Chien","doi":"10.1007/s11129-018-9199-z","DOIUrl":"https://doi.org/10.1007/s11129-018-9199-z","url":null,"abstract":"","PeriodicalId":46425,"journal":{"name":"Qme-Quantitative Marketing and Economics","volume":"16 1","pages":"409 - 440"},"PeriodicalIF":1.9,"publicationDate":"2018-06-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1007/s11129-018-9199-z","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41684164","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-05-09DOI: 10.1007/s11129-018-9198-0
B. Bollinger, Song Yao
{"title":"Risk transfer versus cost reduction on two-sided microfinance platforms","authors":"B. Bollinger, Song Yao","doi":"10.1007/s11129-018-9198-0","DOIUrl":"https://doi.org/10.1007/s11129-018-9198-0","url":null,"abstract":"","PeriodicalId":46425,"journal":{"name":"Qme-Quantitative Marketing and Economics","volume":"16 1","pages":"251 - 287"},"PeriodicalIF":1.9,"publicationDate":"2018-05-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1007/s11129-018-9198-0","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41821171","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-04-18DOI: 10.1007/s11129-018-9197-1
Y. Wei
{"title":"Airline networks, traffic densities, and value of links","authors":"Y. Wei","doi":"10.1007/s11129-018-9197-1","DOIUrl":"https://doi.org/10.1007/s11129-018-9197-1","url":null,"abstract":"","PeriodicalId":46425,"journal":{"name":"Qme-Quantitative Marketing and Economics","volume":"16 1","pages":"341 - 370"},"PeriodicalIF":1.9,"publicationDate":"2018-04-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1007/s11129-018-9197-1","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48238393","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Submitting queries to search engines has become a major way for consumers to search for information and products. The massive amount of search query data available today has the potential to provide valuable information on consumer preferences. In order to unlock this potential, it is necessary to understand how consumers translate their preferences into search queries. Strategic consumers should attempt to maximize the information content of the search results, conditional on a set of beliefs on how the search engine operates. We show using field data that optimal queries may exclude some of the terms that are more relevant to the consumer, potentially at the expense of less relevant terms. In two incentive-aligned lab experiments, we find that consumers have some ability to strategically omit relevant terms when forming their search queries, but that their search queries tend to be suboptimal. In a third incentive-aligned experiment, we find that consumers’ beliefs on how the search engine operates tend to be inaccurate. Overall, our results are consistent with consumers being strategic when formulating their queries, but acting on incorrect beliefs on how the search engine operates.
{"title":"Search query formation by strategic consumers","authors":"Jia Liu, Olivier Toubia","doi":"10.2139/ssrn.3137290","DOIUrl":"https://doi.org/10.2139/ssrn.3137290","url":null,"abstract":"Submitting queries to search engines has become a major way for consumers to search for information and products. The massive amount of search query data available today has the potential to provide valuable information on consumer preferences. In order to unlock this potential, it is necessary to understand how consumers translate their preferences into search queries. Strategic consumers should attempt to maximize the information content of the search results, conditional on a set of beliefs on how the search engine operates. We show using field data that optimal queries may exclude some of the terms that are more relevant to the consumer, potentially at the expense of less relevant terms. In two incentive-aligned lab experiments, we find that consumers have some ability to strategically omit relevant terms when forming their search queries, but that their search queries tend to be suboptimal. In a third incentive-aligned experiment, we find that consumers’ beliefs on how the search engine operates tend to be inaccurate. Overall, our results are consistent with consumers being strategic when formulating their queries, but acting on incorrect beliefs on how the search engine operates.","PeriodicalId":46425,"journal":{"name":"Qme-Quantitative Marketing and Economics","volume":"18 1","pages":"155-194"},"PeriodicalIF":1.9,"publicationDate":"2018-03-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44477105","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) is a federally-funded food assistance program for low income participants who are at nutritional risk. Beneficiaries receive vouchers for specific foods and brands, selected for their nutritional value. While the program is designed to improve nutrition, it may also induce changes in consumption behavior that persist beyond participation in the program. In this paper, we study how participation in WIC impacts the consumption patterns and preferences during and after the program. Our analysis focuses on the cereal category, in which the subsidized brands must meet certain nutritional guidelines. As expected, during the program households increase cereal consumption volume and shift their choices towards the WIC-approved brands. More interesting is that once households exit the program, the higher category consumption rate and elevated share of WIC brands persist. To understand the behavioral mechanism underlying these consumption patterns, we estimate a choice model and find an increased preference for WIC brands after controlling for state dependence. The evidence suggests that this targeted food subsidy program is effective in creating behavior change that persists even after the incentive is withdrawn.
{"title":"The effect of the WIC program on consumption patterns in the cereal category","authors":"Romana Khan, Ting Zhu, S. Dhar","doi":"10.2139/ssrn.3479193","DOIUrl":"https://doi.org/10.2139/ssrn.3479193","url":null,"abstract":"The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) is a federally-funded food assistance program for low income participants who are at nutritional risk. Beneficiaries receive vouchers for specific foods and brands, selected for their nutritional value. While the program is designed to improve nutrition, it may also induce changes in consumption behavior that persist beyond participation in the program. In this paper, we study how participation in WIC impacts the consumption patterns and preferences during and after the program. Our analysis focuses on the cereal category, in which the subsidized brands must meet certain nutritional guidelines. As expected, during the program households increase cereal consumption volume and shift their choices towards the WIC-approved brands. More interesting is that once households exit the program, the higher category consumption rate and elevated share of WIC brands persist. To understand the behavioral mechanism underlying these consumption patterns, we estimate a choice model and find an increased preference for WIC brands after controlling for state dependence. The evidence suggests that this targeted food subsidy program is effective in creating behavior change that persists even after the incentive is withdrawn.","PeriodicalId":46425,"journal":{"name":"Qme-Quantitative Marketing and Economics","volume":"16 1","pages":"79-109"},"PeriodicalIF":1.9,"publicationDate":"2018-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44100056","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A tie-in contract has frequently come under scrutiny for its role as an exclusionary device. A firm that is a monopolist in a primary market can utilize such contracts to exclude a more efficient rival in a secondary market. When the firms sell through competing retailers, the leveraging firm may offer tie-in contracts to the retailers inducing them to purchase both primary and secondary products entirely from it such that the rival is excluded. We examine whether such tie-in contracts are profitable for an incumbent firm under different conditions of (i) the ability to commit to prices by the upstream firms and (ii) downstream competition among the retailers. We show that when retailers compete in prices, then regardless of whether the entrant is able to commit to its own prices, an exclusionary tie-in strategy is profitable (not profitable) for the incumbent when it is able (unable) to commit to prices. However, when retailers compete in quantities, the entrant’s commitment ability does matter. Specifically, an exclusionary tie-in strategy (i) may be unprofitable for an incumbent when both upstream firms are able to commit to their prices, depending on the degree of cost advantage of the entrant; (ii) is always profitable when it alone can commit to its price; and (iii) is unprofitable when both upstream firms cannot commit to their prices. Our results extend to situations where the products are complementary or substitutes and where the retailers may be asymmetric in nature.
{"title":"Tie-in contracts with downstream competition","authors":"Sreya Kolay","doi":"10.2139/SSRN.1318364","DOIUrl":"https://doi.org/10.2139/SSRN.1318364","url":null,"abstract":"A tie-in contract has frequently come under scrutiny for its role as an exclusionary device. A firm that is a monopolist in a primary market can utilize such contracts to exclude a more efficient rival in a secondary market. When the firms sell through competing retailers, the leveraging firm may offer tie-in contracts to the retailers inducing them to purchase both primary and secondary products entirely from it such that the rival is excluded. We examine whether such tie-in contracts are profitable for an incumbent firm under different conditions of (i) the ability to commit to prices by the upstream firms and (ii) downstream competition among the retailers. We show that when retailers compete in prices, then regardless of whether the entrant is able to commit to its own prices, an exclusionary tie-in strategy is profitable (not profitable) for the incumbent when it is able (unable) to commit to prices. However, when retailers compete in quantities, the entrant’s commitment ability does matter. Specifically, an exclusionary tie-in strategy (i) may be unprofitable for an incumbent when both upstream firms are able to commit to their prices, depending on the degree of cost advantage of the entrant; (ii) is always profitable when it alone can commit to its price; and (iii) is unprofitable when both upstream firms cannot commit to their prices. Our results extend to situations where the products are complementary or substitutes and where the retailers may be asymmetric in nature.","PeriodicalId":46425,"journal":{"name":"Qme-Quantitative Marketing and Economics","volume":"16 1","pages":"43-77"},"PeriodicalIF":1.9,"publicationDate":"2018-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43130154","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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