nep-mkt New Economics Papers
on Marketing
Issue of 2014‒03‒08
four papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior and Universidade de Lisboa

  1. Targeted pricing, consumer myopia and investment in customer-tracking technology By Baye, Irina; Sapi, Geza
  2. What do we learn from comparing hedonic scores and willingness-to-pay data? By Emilie Ginon; Pierre Combris; Youenn Loheac; Géraldine Enderli; Sylvie Issanchou
  3. Referral Incentives in Crowdfunding By Naroditskiy, Victor; Stein, Sebastian; Tonin, Mirco; Tran-Thanh, Long; Vlassopoulos, Michael; Jennings, Nicholas R.
  4. Extremal Information Structures in the First Price Auction By Dirk Bergemann; Benjamin A. Brooks; Stephen Morris

  1. By: Baye, Irina; Sapi, Geza
    Abstract: We analyze how consumer myopia influences investment incentives into a technology that enables firms to track consumers' purchases and make targeted offers based on their preferences. In a two-period Hotelling setup firms may invest in customer-tracking technology. If a firm acquires the technology, it can practice first-degree price discrimination among consumers that bought from it in the first period. We distinguish between the cases of all consumers being myopic and when they are sophisticated. In equilibrium firms collect customer data only when consumers are myopic. In that case two asymmetric equilibria emerge, with either one firm investing in customer-tracking technology. We derive several surprising results for consumer policy: First, contrary to conventional wisdom, firms are better-off when consumers are sophisticated. Second, consumers may be better-off being myopic than sophisticated, provided they are sufficiently patient (the discount factor is high enough). Third, in the latter case there is a tension between consumer and social welfare, and correspondingly between consumer and other policies: With myopic consumers, banning customer-tracking would increase social welfare, but may reduce consumer surplus. --
    Keywords: Price Discrimination,Customer Data,Consumer Myopia
    JEL: D43 L13 L15 O30
    Date: 2014
  2. By: Emilie Ginon (Centre des Sciences du Goût et de l'Alimentation - Institut National de la Recherche Agronomique, LESSAC - Laboratoire d'Expérimentation en Sciences Sociales et Analyse des Comportements - ESC Dijon); Pierre Combris (ALISS - Alimentation et sciences sociales - Institut national de la recherche agronomique (INRA) : UR1303); Youenn Loheac (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie, FBS - France Business School - France Business School); Géraldine Enderli (ALISS - Alimentation et sciences sociales - Institut national de la recherche agronomique (INRA) : UR1303, CSGA - Centre des Sciences du Goût et de l'Alimentation - CNRS : UMR6265 - Institut national de la recherche agronomique (INRA) : UMR1324 - Université de Bourgogne); Sylvie Issanchou (Centre des Sciences du Goût et de l'Alimentation - Institut National de la Recherche Agronomique)
    Abstract: Consumer preferences for different variants of a given food product can be directly obtained with hedonic measurements or revealed with willingness-to-pay measurements. The aim of this paper is to present a comparison of the data collected using these two types of measurements on four data sets collected in our laboratory for different food products (bread, cooked ham, cheese and orange juice). This comparison was conducted at two levels (global and individual) and was based on two criteria: discrimination between variants and consistency in variant ranking. For the four data sets, hedonic measurements and willingness-to-pay measurements were collected for each participant in a 'full information' condition, i.e. in a condition where participants tasted each variant associated with extrinsic information. To reveal consumer willingness-to-pay, the BDM mechanism was used (Becker, DeGroot, & Marschak, 1964), which consists in real sales at a random price. Aggregate results were similar for the two measurements. In addition, in two out of four studies, willingness-to-pay measurements led to slightly higher discrimination between variants than hedonic measurements. At the individual level, more inconsistencies were found. This result is in line with previous studies. Nevertheless, participants were more consistent concerning the most-liked variant than concerning the least-liked variant. Our results also showed that hedonic score distributions did not reveal any cut-off point below which consumers chose the no-purchase option; this cut-off point largely depended on individuals and products.
    Keywords: Willingness-to-pay; Hedonic scores; Consumer preferences; Consistency; Discrimination; Food valuation
    Date: 2014–04
  3. By: Naroditskiy, Victor (University of Southampton); Stein, Sebastian (University of Southampton); Tonin, Mirco (University of Southampton); Tran-Thanh, Long (University of Southampton); Vlassopoulos, Michael (University of Southampton); Jennings, Nicholas R. (University of Southampton)
    Abstract: Word-of-mouth, referral, or viral marketing is a highly sought-after way of advertising. We undertake a field experiment that compares incentive mechanisms for encouraging social media shares to support a given cause. Our experiment takes place on a website set up to promote a fundraising drive by a large cancer research charity. Site visitors who choose to sign up to support the cause are then asked to spread the word about the cause on Facebook, Twitter or other channels. Visitors are randomly assigned to one of four treatments that differ in the way social sharing activities are incentivised. Under the control treatment, no extra incentive is provided. Under two of the other mechanisms, the sharers are offered a fixed number of points that help take the campaign further. We compare low and high levels of such incentives for direct referrals. In the final treatment, we adopt a multi-level incentive mechanism that rewards direct as well as indirect referrals (where referred contacts refer others). We find that providing high level of incentives results in a statistically significant increase in sharing behaviour and resulting signups. Our data does not indicate a statistically significant increase for the low and recursive incentive mechanisms.
    Keywords: crowdfunding, referral marketing
    JEL: C93 D64 L31 M31
    Date: 2014–02
  4. By: Dirk Bergemann; Benjamin A. Brooks; Stephen Morris
    Date: 2014–02–24

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