nep-mkt New Economics Papers
on Marketing
Issue of 2016‒07‒16
seven papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Economic recommendation with surplus maximization By Zhang, Yongfeng; Zhao, Qi; Zhang, Yi; Friedman, Daniel; Zhang, Min; Liu, Yiqun; Ma, Shaoping
  2. Offering Energy Efficiency under Imperfect Competition and Consumer Inattention By Tode, Christian
  3. Risk and Loss Aversion, Price Uncertainty and the Implications for Consumer Search By Adriaan R. Soetevent; Tadas Bruzikas
  4. Media bias in women's magazines: Do advertisements influence editorial content? By Pannicke, Julia
  5. Performing Art Consumption and the Artistic Benefit: A new dimension for engaging customers in performing arts By Francesco Casarin; Fabio Marzella
  6. The effect of demographics on payment behavior: panel data with sample selection By Stavins, Joanna
  7. Consumer information in a market for expert services: Experimental evidence By Schneider, Tim; Meub, Lukas; Bizer, Kilian

  1. By: Zhang, Yongfeng; Zhao, Qi; Zhang, Yi; Friedman, Daniel; Zhang, Min; Liu, Yiqun; Ma, Shaoping
    Abstract: A prime function of many major World Wide Web applications is Online Service Allocation (OSA), the function of matching individual consumers with particular services/goods (which may include loans or jobs as well as products) each with its own producer. In the applications of interest, consumers are free to choose, so OSA usually takes the form of personalized recommendation or search in practice. The performance metrics of recommender and search systems currently tend to focus on just one side of the match, in some cases the consumers (e.g. satisfaction) and in other cases the producers (e.g., profit). However, a sustainable OSA platform needs benefit both consumers and producers; otherwise the neglected party eventually may stop using it. In this paper, we show how to adapt economists' traditional idea of maximizing total surplus (the sum of consumer net benefit and producer profit) to the heterogeneous world of online service allocation, in an effort to promote the web intelligence for social good in online eco-systems. Modifications of traditional personalized recommendation algorithms enable us to apply Total Surplus Maximization (TSM) to three very different types of real-world tasks - e-commerce, P2P lending and freelancing. The results for all three tasks suggest that TSM compares very favorably to currently popular approaches, to the benefit of both producers and consumers.
    Keywords: Total Surplus Maximization,Online Service Allocation,Computational Economics,Recommendation Systems,Web-based Services
    Date: 2016
  2. By: Tode, Christian (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))
    Abstract: Energy efficiency is considered to be a win-win situation for both the economy and the environment. Producing products and services at lower energy input and related input costs can contribute to climate change abatement and economic competitiveness. Actual implementation of energy efficiency falls short to expectations, though. For one thing, research suggests that consumer inattention is an underlying force for underinvestments. For another thing, energy supply markets are often characterized by imperfect competition. Do firms in the energy retail market have incentives to voluntarily introduce energy efficiency? Or should informational regulation inform inattentive consumers? In this article I show that consumer inattention and imperfect competition are the crucial drivers for firms' decisions to introduce or conceil energy efficiency to customers. I find two symmetric equilibria: One in which both firms introduce energy efficiency and one in which both firms conceil energy efficiency. Equilibrium coordination depends on the distribution of consumers that are attentive to energy effienciency and consumers that are not. Further, mandatory disclosure laws are found to be weakly welfare increasing.
    Keywords: Imperfect Competition; Consumer Inattention; Product Differentiation; Disclosure; Energy Efficiency
    JEL: D83 L13 L41
    Date: 2016–07–06
  3. By: Adriaan R. Soetevent (University of Groningen, The Netherlands); Tadas Bruzikas (University of Groningen, The Netherlands)
    Abstract: Do the choices of consumers who search for a product's best price exhibit risk neutral, risk averse or loss averse risk attitudes? We study how in a problem of sequential search with costless recall the relation between a consumer's willingness to pay for continued search and the level of price uncertainty depends on her risk preferences. Independent of the current best price, an increase in price uncertainty encourages continued search when consumers are risk neutral. However, we prove that theory predicts an inversion when consumers are either risk or loss averse. In those cases, an increase in price uncertainty only increases the consumer's willingness to pay (WTP) for continued search if the current best price is sufficiently low. We subsequently use this observation in an empirical test to identify between different risk preferences in a stylized problem of sequential search. In line with the inversion, we find that a reduction in price uncertainty decreases the WTP for continued search when the current best price is low but increases the WTP when it is high. While at odds with the assumption of risk neutrality, this finding is consistent with models of consumer risk and/or loss aversion. Moreover, the model parameters of risk and loss aversion that lead to the best empirical fit have values similar to those estimated for other decision domains.
    Keywords: consumer search; risk aversion; loss aversion; price uncertainty
    JEL: D11 D12 D83 M31
    Date: 2016–07–04
  4. By: Pannicke, Julia
    Abstract: Existing theoretical and empirical studies on Media Bias are subjects of controversial discussions in the literature. However, scientific literatures on Media Bias establish empirical evidence for a positive impact of advertising volume on media coverage. To get in line with the debated literature about whether biases occur, this economic paper presents an empirical analysis of a possible (commercial) Media Bias influenced by advertising expenditure in monthly women´s magazines. The results of a linear panel model regression, a panel poisson regression, as well as those of a panel negative binomial regression model show that there is a positive correlation with the amount of advertising expenditure on the coverage of a company that purchased advertisements on the women's magazines in Germany. A positive correlation between advertising volume and the nomination as well as prize winning of (cosmetic) products could also be found.
    Keywords: media bias,advertisement,advertising volume,coverage,two-sided markets
    Date: 2015
  5. By: Francesco Casarin (Dept. of Management, Università Ca' Foscari Venice); Fabio Marzella (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: .
    Keywords: artistic benefit; arts marketing; artistic experience; value co-creation; audience empowerment; performing arts.
    JEL: M40
    Date: 2016–06
  6. By: Stavins, Joanna (Federal Reserve Bank of Boston)
    Abstract: Connolly and Stavins (2015) showed that payment behavior is strongly correlated with consumers’ demographic and income attributes over the 2009–2013 period. In this paper, we apply a random effects panel data model with sample selection based on Wooldridge (1995) to estimate the effect of each attribute on payment-instrument adoption and use. We find that age, education, income, and race are significant in explaining payment behavior even after controlling for all the other attributes of consumers and for payment-instrument characteristics. Most notably, the lowest-income, lowest-education, and minority consumers adopt a very limited set of payment instruments compared with their counterparts even when education and age are controlled for. These consumers also have a significantly different pattern of payment use conditional on adoption; they rely significantly more on cash and less on credit cards for their transactions. The data do not allow us to isolate supply-side and demand-side factors to explain the causes of these discrepancies. Women use significantly less cash than men, but use more debit cards, checks, and online banking bill pay, even when we control for the degree of bill-paying responsibility they have for their households. Single people use more cash, while married people use more checks. Although characteristics of payment instruments, such as cost, convenience, and security, significantly affect payment behavior, consumers’ socio-demographic attributes explain most of the variation. Separating the effects of consumers’ age from the effects of birth cohorts indicates that in most cases age and birth-cohort trends move together.
    JEL: D12 D14 E41
    Date: 2016–06–07
  7. By: Schneider, Tim; Meub, Lukas; Bizer, Kilian
    Abstract: Markets for expert services are characterized by information asymmetries between experts and consumers. We analyze the effects of consumer information, where consumers suffer from either a minor or serious problem and only experts can infer the appropriate treatment. Consumer information is a noisy signal that is informative about a consumer's problem severity. In a laboratory experiment, we show that consumers are generally reluctant to accept expensive treatment recommendations, which is endorsed by good signals and fundamentally changed by bad signals. Experts condition their cheating on a consumer's risk of suffering from a serious problem if they can observe consumer information. Accordingly, experts and low-risk consumers benefit at the expense of more frequently cheated high-risk consumers. Consumer information leads to more appropriate treatments being carried out and thus superior overall welfare. In contrast to our theoretical predictions, this effect does not depend on hiding consumer information for experts.
    Keywords: consumer information,credence goods,experts,laboratory experiment
    JEL: C70 C91 D82
    Date: 2016

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