Purchase History
Virus Shook the Streaming Star: Estimating the COVID-19 Impact on Music Consumption
Jaeung Sim et al.
Marketing Science, forthcoming
Abstract:
Many have speculated that the recent outbreak of COVID-19 has led to a surge in the use of online streaming services. However, this assumption has not been closely examined for music streaming services, the consumption patterns of which can be different from video streaming services. To provide insights into this question, we analyze Spotify’s streaming data for the weekly top 200 songs for two years in 60 countries between June 2018 and May 2020, along with varying lockdown policies and detailed daily mobility information from Google. Empirical evidence shows that the COVID-19 outbreak significantly reduced music streaming consumption in many countries. We also find that countries with larger mobility decreases saw more notable downturns in streaming during the pandemic. Further, we reveal that the mobility effect was attributable to the complementarity of music consumption to other activities and likely to be transient rather than irreversible. Alternative mechanisms, such as unobservable Spotify-specific factors, a demand shift from top-selling songs to niche music, and supply-side effects, did not explain the decline in music consumption.
Thumbs Up or Down: Consumer Reactions to Decisions by Algorithms versus Humans
Gizem Yalcin et al.
Journal of Marketing Research, forthcoming
Abstract:
Although companies increasingly are adopting algorithms for consumer-facing tasks (e.g., application evaluations), little research has compared consumers’ reactions to favorable decisions (e.g., acceptances) versus unfavorable decisions (e.g., rejections) about themselves that are made by an algorithm versus a human. Ten studies reveal that, in contrast to managers’ predictions, consumers react less positively when a favorable decision is made by an algorithmic (vs. a human) decision maker, whereas this difference is mitigated for an unfavorable decision. The effect is driven by distinct attribution processes: It is easier for consumers to internalize a favorable decision outcome that is rendered by a human (vs. an algorithm), while it is easy to externalize an unfavorable decision outcome regardless of the decision maker type. The authors conclude by advising managers on how to limit the likelihood of less positive reactions toward algorithmic (vs. human) acceptances.
The Bulletproof Glass Effect: Unintended Consequences of Privacy Notices
Aaron Brough et al.
Journal of Marketing Research, forthcoming
Abstract:
Drawing from a content analysis of publicly-traded companies’ privacy notices, a survey of managers, a field study, and five online experiments, this research investigates how consumers respond to privacy notices. A privacy notice, by placing legally-enforceable limits on a firm’s data practices, communicating safeguards, and signaling transparency, might be expected to promote confidence that personal data will not be misused. Indeed, most managers expected a privacy notice to make customers feel more secure (Study 1). Yet, consistent with the analogy that bulletproof glass can increase feelings of vulnerability despite the protection offered, formal privacy notices undermined consumer trust and decreased purchase interest even when they emphasized objective protection (Studies 2, 3, and 5) or omitted any mention of potentially concerning data practices (Study 6). These unintended consequences did not occur, however, when consumers had an a priori reason to be distrustful (Study 4) or when benevolence cues were added to privacy notices (Studies 5-6). Finally, Study 7 showed that both the presence and conspicuous absence of privacy information are sufficient to trigger decreased purchase intent. Together, these results provide actionable guidance to managers on how to effectively convey privacy information (without hurting purchase interest).
Learning to Set Prices
Yufeng Huang, Paul Ellickson & Mitchell Lovett
Journal of Marketing Research, forthcoming
Abstract:
The authors empirically examine how firms learn to set prices in a new market. The 2012 privatization of off-premise liquor sales in Washington State created a unique opportunity to observe retailers learn to set prices from the point at which their learning process began. Tracking this market as it evolved through time, the authors find that firms indeed learn to set more profitable prices, that these prices increasingly reflect demand fundamentals, and they ultimately converge to levels consistent with (static) profit maximization. The paper further demonstrates that initial pricing mistakes are largest for products whose demand conditions differ the most from those of previously privatized markets, that retailers with previous experience in the category are initially better-informed, and that learning is faster for products with more precise sales information. These findings indicate that firm behavior converges to rational models of firm conduct, but also reveal that such convergence takes time to unfold and play out differently for different firms. These patterns suggest important roles for both firm learning and heterogeneous firm capabilities.
Brand Capital and Stock Price Crash Risk
Mostafa Monzur Hasan, Grantley Taylor & Grant Richardson
Management Science, forthcoming
Abstract:
We examine the relationship between brand capital and stock price crash risk. Crash risk, defined as the negative skewness in the distribution of returns for individual stocks, captures asymmetry in risk, and has important implications for investment choices and risk management. Using a sample of 39,685 publicly listed U.S. firm-year observations covering 1975 to 2018, we show that brand capital is significantly and negatively related to crash risk. We also use an advanced machine learning approach and confirm that brand capital is a strong predictor of future stock price crashes. Our cross-sectional analyses show that this negative relationship is more evident for subsamples with transitory poor earnings performance or persistent good earnings performance, greater corporate tax avoidance, and weak corporate governance structures. The results survive numerous robustness tests, including the use of alternative measures of brand capital, crash risk, and several endogeneity tests. In sum, our findings are consistent with agency theory, suggesting that high levels of brand capital expose firms to investor and customer scrutiny, which reduces managerial opportunistic behavior that may include the accumulation and concealment of negative information.