Custom Order
Superiority-Seeking and the Preference for Exclusion
Alex Imas & Kristóf Madarász
NBER Working Paper, August 2022
Abstract:
We propose that a person’s desire to consume an object or possess an attribute increases in how much others want but cannot have it. We term this motive superiority-seeking, and show that it generates preferences for exclusion that help explain a host of market anomalies and make novel predictions in a variety of domains. In bilateral exchange, there is a reluctance to trade and people exhibit a ‘social endowment effect.’ People’s value of consuming a good increases in its scarcity, which generates a motive for firms and organizations to cater to such preferences by engaging in exclusionary policies. Randomly barring potential consumers from the opportunity to acquire a product increases the seller’s profits both in standard monopoly and auction settings. Such non-price-based exclusion leads to higher revenues than the classic optimal sales mechanisms. A series of experiments provides direct support for these predictions. In basic exchange, a person’s willingness to pay for a good increases as more people are explicitly barred from the opportunity to acquire it. In auctions, randomly excluding people from the opportunity to bid substantially increases bids amongst those who retain this option. Exclusion leads to bigger gains in expected revenue than increasing competition through inclusion. Our model of superiority-seeking generates ‘Veblen effects,’ rationalizes attitudes against redistribution, and provides a novel motive for social stratification and discrimination.
Phone and Self: How Smartphone Use Increases Preference for Uniqueness
Camilla Eunyoung Song & Aner Sela
Journal of Marketing Research, forthcoming
Abstract:
One of the most dramatic shifts in recent years has been consumers’ increased use of smartphones for making purchases and choices, but does using a smartphone influence what consumers choose? This paper shows that, compared with using a personal computer (PC), making choices using a personal smartphone leads consumers to prefer more unique options. The authors theorize that because smartphones are considerably more personal and private than PCs, using them activates intimate self-knowledge and increases private self-focus, shifting attention toward individuating personal preferences, feelings, and inner states. Consequently, making choices using a personal smartphone, compared with a PC, tends to increase the preference for unique and self-expressive options. Six experiments and several replications examine the effects of personal smartphone use on the preference for unique options and test the underlying role of private self-focus. The findings have important implications for theories of self-focus, uniqueness seeking, and technology’s impact on consumers, as well as tangible implications for many online vendors, brands, and researchers who use mobile devices to interact with their respective audiences.
Consumer Behavior and the Rise of Broadband: A Retail Apocalypse?
Uyen Tran
University of Chicago Working Paper, April 2022
Abstract:
I explore US consumer retail behavior during the proliferation of broadband internet from 2004 to 2018. Using household and retail scanner data, I capture consumer behavior using seven outcomes: (1) trip frequency, (2) total spending, (3) unique chains visited, (4) unique brands purchased, (5) prices, (6) price dispersion, and (7) price elasticities of demand. Contrary to popular media reporting, I show aggregate retail trends during the rise of broadband are muted and do not support the hypothesis that the collapse of brick-and-mortar retail is imminent. Only 2 of the 7 outcomes changed by more than 10%: The number of unique brands decreased by 12.5% and average prices grew at 24%, consistent with inflation. Exploiting the differential growth in broadband across counties, I estimate the effect of local broadband access on each of the seven outcomes. I find the direct effects of broadband are also muted: Across all outcomes, the estimates are centered at zero and the upper and lower bounds of the 95% confidence intervals are economically insignificant. These conclusions are consistent with estimates using within-household internet adoption. Taken together, my results show fears of the retail apocalypse are quantitatively unwarranted.
The Impact of the Gig Economy on Product Quality Through the Labor Market: Evidence from Ridesharing and Restaurant Quality
Minkyu Shin et al.
Management Science, forthcoming
Abstract:
This paper seeks to demonstrate the impact of the gig economy on product quality in seemingly unrelated local industries through the labor market. Our empirical context is the quality of service for restaurants in the city of Austin, and we examine how they were impacted by the exogenous exit and reentry of rideshare platforms, Uber and Lyft, because of regulatory changes. We leverage these exogenous shocks and combine them with sentiment-analyzed data from Yelp reviews that capture how customers assess the quality of service at each restaurant. We show that, compared with control cities, customers in Austin become more negative about service quality when Uber and Lyft are present in the city. Additionally, we use rich data on employee turnover and wages to demonstrate that service staff turnover increases in Austin when Uber and Lyft are present compared with the control cities. We also conduct several additional studies and robustness checks that are all congruent with our hypothesis that Uber and Lyft lower the quality of service in Austin restaurants by raising their staff turnover. Together, these results suggest significant ramifications of the gig economy on the broader industries through the labor market.
AI composer bias: Listeners like music less when they think it was composed by an AI
Daniel Shank et al.
Journal of Experimental Psychology: Applied, forthcoming
Abstract:
The use of artificial intelligence (AI) to compose music is becoming mainstream. Yet, there is a concern that listeners may have biases against AIs. Here, we test the hypothesis that listeners will like music less if they think it was composed by an AI. In Study 1, participants listened to excerpts of electronic and classical music and rated how much they liked the excerpts and whether they thought they were composed by an AI or human. Participants were more likely to attribute an AI composer to electronic music and liked music less that they thought was composed by an AI. In Study 2, we directly manipulated composer identity by telling participants that the music they heard (electronic music) was composed by an AI or by a human, yet we found no effect of composer identity on liking. We hypothesized that this was due to the “AI-sounding” nature of electronic music. Therefore, in Study 3, we used a set of “human-sounding” classical music excerpts. Here, participants liked the music less when it was purportedly composed by an AI. We conclude with implications of the AI composer bias for understanding perception of AIs in arts and aesthetic processing theories more broadly.
Multiyear Impact of Backorder Delays: A Quasi-Experimental Approach
Hyung Sup (Zack) Bhan & Eric Anderson
Marketing Science, forthcoming
Abstract:
When an item is temporarily out of stock, it is common practice for a retailer to inform customers that the item can be ordered but shipping is delayed. This is referred to as a backorder. Measuring the impact of backorder delays on future customer purchase behavior is critical for customer relationship management but challenging because of endogeneity: the best customers are most likely to experience backorders. In this paper, we develop a quasi-experimental approach to measure the effect of a backorder delay that generalizes to most online, durable goods retailers. We show that, on average, a backorder delay leads to a 2.1% decrease in customer orders the subsequent year and is moderated by shipping delay. Among customers who experience a shipping delay beyond 10 days, there is a 6.1% reduction in orders the subsequent year and a 4.6% loss in cumulative orders over four years. In our study, this results in as much as 25 million dollars per year in lost profit. Attempts to mitigate the negative effect of backorders by varying the quoted shipping date had little measurable impact. But our analysis uncovers moderators of the negative impact, which allows managers to prioritize customer outreach among buyers who experience a backorder delay.
Examining the Efficacy of Time Scarcity Marketing Promotions in Online Retail
Jillian Hmurovic, Cait Lamberton & Kelly Goldsmith
Journal of Marketing Research, forthcoming
Abstract:
Time scarcity promotions (e.g., “40% off for a limited time”) are mainstays of retail marketing. But might translating them to online shopping contexts alter or nullify their efficacy? The authors first report a meta-analysis of published and unpublished research as well as a simulated shopping experiment suggesting that the positive effects of time scarcity promotions observed offline may not emerge in online shopping contexts. They then posit that this difference arises because, in the online context, time scarcity promotions activate persuasion knowledge, which in turn changes their effects. In support of this, the authors demonstrate that when retailer-exogeneous justifications are given for online time scarcity promotions (e.g., consumers’ birthdays, seasonal changes), persuasion knowledge activation is decreased, improving time scarcity promotions’ effects on consumer interest. Further, when an exogenous justification is combined with less, as opposed to more, time until an online promotion’s expiration, significant positive effects on consumer engagement may be observed. However, effects stop short of suggesting that time scarcity promotions will consistently yield superior outcomes compared to identical control promotions online. Therefore, the authors highlight the continued need for careful managerial use as well as further research related to the optimal translation of offline tactics to online retail.