Worth It
The “Next” Effect: When a Better Future Worsens the Present
Ed O’Brien
Social Psychological and Personality Science, forthcoming
Abstract:
Various domains of life are improving over time, meaning the future is filled with exciting advances that people can now look forward to (e.g., in technology). Three preregistered experiments (N = 1,602) suggest that mere awareness of better futures can risk spoiling otherwise enjoyable presents. Across experiments, participants interacted with novel technologies -- but, via random assignment, some participants were informed beforehand that even better versions were in the works. Mere awareness of future improvement led participants to experience present versions as less enjoyable -- despite being new to them, and despite being identical across conditions. They even bid more money to be able to end their participation early. Why? Such knowledge led these participants to perceive more flaws in present versions than they would have perceived without such knowledge -- as if prompted to infer that there must have been something to improve upon (or else, why was a better one needed in the first place?) -- thus creating a less enjoyable experience. Accordingly, these spoiling effects were specific to flaw-relevant stimuli and were attenuated by reminders of past progress already achieved. All told, the current research highlights important implications for how today’s ever better offerings may be undermining net happiness (despite marking absolute progress). As people continually await exciting things still to come, they may be continually dissatisfied by exciting things already here.
TV Advertising Effectiveness and Profitability: Generalizable Results From 288 Brands
Bradley Shapiro, Günter Hitsch & Anna Tuchman
Econometrica, July 2021, Pages 1855-1879
Abstract:
We estimate the distribution of television advertising elasticities and the distribution of the advertising return on investment (ROI) for a large number of products in many categories. Our results reveal substantially smaller advertising elasticities compared to the results documented in the literature, as well as a sizable percentage of statistically insignificant or negative estimates. The results are robust to functional form assumptions and are not driven by insufficient statistical power or measurement error. The ROI analysis shows negative ROIs at the margin for more than 80% of brands, implying over-investment in advertising by most firms. Further, the overall ROI of the observed advertising schedule is only positive for one third of all brands.
The Impact of Corporate Social Responsibility on Brand Sales: An Accountability Perspective
Dionne Nickerson et al.
Journal of Marketing, forthcoming
Abstract:
Consumers are increasingly mindful of CSR when making purchase and consumption decisions. While extant research suggests small, positive effects of CSR on measures of firm financial valuation, consumers' behavioral response to CSR initiatives in the form of actual purchase decisions remains undocumented. This paper introduces a framework categorizing firm-initiated CSR efforts as “Corrective,” “Compensating,” or “Cultivating goodwill” actions, and documents the influence of these different types of CSR on brand sales. Leveraging a database of CSR press releases and sales data from leading CPG brands, the authors examine the effect of CSR announcements on brand sales. The findings suggest that CSR initiatives that genuinely seek to reduce a brand's negative social or environmental impact (“Corrective” and “Compensating”) produce the greatest sales lift, while CSR actions consisting of purely philanthropic-type efforts (“Cultivating goodwill”) can actually hurt sales. The experimental results show that, conditional on CSR reputation, consumers perceive varying degrees of sincerity in the different CSR types, which mediate the effect of CSR type on purchase intentions. Overall, the results suggest that consumers are more inclined to reward firms that directly reduce the negative by-products of their own business practices than to be impressed by public goodwill gestures.
The value of space during a pandemic
Max Hyman & Ian Savage
Economics Letters, forthcoming
Abstract:
To encourage social distancing during the COVID-19 pandemic, Delta Air Lines did not sell the middle seat on its flights that had them. In the second half of 2020 its principal rivals, American Airlines and United Airlines, continued to sell the middle seat. Analysis of U.S. Department of Transportation airline ticket data on 1,358 domestic routes finds that Delta raised its fares by 15%. Therefore, passengers paid $23 to prevent a stranger from sitting next to them.
Consumers as Naive Physicists: How Visual Entropy Cues Shift Temporal Focus and Influence Product Evaluations
Gunes Biliciler, Rajagopal Raghunathan & Adrian Ward
Journal of Consumer Research, forthcoming
Abstract:
Marketers often use images to promote their products. For example, an advertisement for kitchen tools might display the tools alongside various ingredients, or an advertisement for a bookstore might showcase pictures of the store’s interior. One underlying visual characteristic of such images is the degree of “entropy” -- or disorder -- in their content. Motivated by a fundamental principle from physics -- namely, that entropy can only increase over time -- the present research examines how entropy influences consumers’ judgments and decisions. Across two pilot studies and five experiments, we find that while high-entropy images shift consumers’ temporal focus to the past, low-entropy images shift their temporal focus to the future. These entropy-induced shifts in temporal focus influence consumers’ decisions. Specifically, consistent with the notion of “fit fluency,” we find that consumers evaluate past-related (e.g., vintage) products more favorably when they are accompanied by high-entropy images, and future-related (e.g., futuristic) products more favorably when they are accompanied by low-entropy images. We discuss the theoretical and managerial implications of our findings.