|01/30/15||9:00 AM-11:00 AM||Grainger 4151||Dr. Baojun Jiang||Olin Business School, Washington University in St. Louis||See Synopsis||Signaling through Price and Quality to Consumers with Fairness Concerns|
|02/13/15||9:00 AM-11:00 AM||Grainger 4151||Dr. Dhavan Shah||School of Journalism and Mass Communication, University of Wisconsin-Madison||See Synopsis||Communication, Consumption, and Civil Society: Media and Politics at the Checkout Line|
|03/06/15||1:15 PM -2:45 PM|
|Dr. Oleg Urminsky||Booth School of Business, University of Chicago||See Synopsis||The Outlook Effect: How Future Expectancy Affects Consumer Choice Consistency|
|9:00 AM-11:00 AM||Grainger 4151||Dr. Vlad Griskevicius||Carlson School of Management, University of Minnesota||See Synopsis||Fundamental motives: How evolutionary needs influence consumer behavior|
|03/20/15||9:00 AM-11:00 AM||Grainger 4151||Dr. Robyn LeBoeuf||Olin Business School, Washington University in St. Louis||See Synopsis||Overly Specific Gift Giving: Givers Choose Personalized but Less-Versatile and Less- Preferred Gifts|
|04/10/15||9:00 AM-11:00 AM||Grainger 4151||Dr. Michael Norton||Harvard Business School||See Synopsis||Prosocial Spending and Happiness: Using Money to Benefit Others Pays Off|
|05/01/15||1:15 PM -2:45 PM||Grainger 3180||Dr. Yang Li||Cheung Kong Graduate School of Business||See Synopsis||Variational Bayesian Inference for Big Data Marketing Models|
|05/08/15||9:00 AM-11:00 AM||Grainger 4151||Dr. Raghu Iyenger||The Wharton School of the University of Pennsylvania||See Synopsis||Consumer Search and the Structure of Personal Networks|
Signaling through Price and Quality to Consumers with Fairness Concerns
Baojun Jiang, Ph.D
Consumers with inequity aversion experience some psychological disutility when buying products at unfair prices. Empirical evidence and behavioral research suggest that consumers may perceive a firm’s price as unfair when its profit margin is too high relative to consumers’ surplus. In practice, however, consumers may be uncertain about the fairness of the firm’s price, because they may not know the firm’s cost even for search goods, whose quality is readily evaluated before purchase. Since inequity-averse consumers have a higher willingness-to-pay for any given quality when the firm’s cost is higher, a cost-efficient firm may have an incentive to mimic an inefficient firm’s pricing and quality strategies. We develop a game-theoretic model to investigate the effects of the consumer’s inequity aversion on a firm’s pricing and quality decisions. We highlight several interesting findings. First, because of the consumer’s uncertainty about the firm’s cost, the firm’s optimal quality may be non-monotone with respect to the degree of the consumer’s inequity aversion. Second, stronger inequity aversion makes an inefficient firm worse off, but may benefit an efficient firm. Third, we show that stronger inequity aversion by the consumer can actually lower the consumer’s monetary payoff (economic surplus) because the firm may reduce its quality to a greater extent than it reduces its price. Lastly, as the average cost-efficiency in the market decreases, both the expected quality and the social welfare may increase rather than decrease.
Communication, Consumption, and Civil Society: Media and Politics at the Checkout Line
Dhavan V. Shah
The Outlook Effect: How Future Expectancy Affects Consumer Choice Consistency
Oleg Urminsky, Associate Professor
Sometimes a consumer prefers to repeat past choices, while other times the same consumer prefers to try something new. We demonstrate that a consumers’ situational outlook for an unrelated future event (i.e. feeling optimistic vs. pessimistic about the outcome) can broadly and systematically affect their sequential choice consistency. Specifically, an optimistic outlook increases repeating past choices, while a pessimistic outlook decreases repeated choices and increases novel choices. We test this “Outlook Effect” in two experimental paradigms, using both real and hypothetical consumer choices, across seven studies. We first establish the basic effect of situational outlook on sequential choice consistency (Studies 1 & 2). Then, we provide evidence that differences in the preference for self-continuity underlie the effect (Studies 3 through 6). Last, we generalize our findings to choices between broadly defined usual vs. novel products (Study 7). Across the studies, we rule out differences in affective states, causal attribution, and perceived control as alternative explanations. These findings have important theoretical implications for future research on the relationship between future-oriented cognition and consumer behaviors, as well as potential managerial implications for when consumers will be more prone to repeat past purchases or more open to novel product adoption.
Fundamental motives: How evolutionary needs influence consumer behavior
Vladas Griskevicius, Department Chair
EVOLUTION, MOTIVATION, AND CONSUMER BEHAVIOR
Can we better understand modern consumer behavior by examining its links to our ancestral
past? I review evidence that deep-seated evolutionary motives continue to influence much
modern behavior, albeit not always in obvious or conscious ways. These fundamental motives
include: (1) evading physical harm, (2) avoiding disease, (3) making friends, (4) attaining status,
(5) acquiring a mate, (6) keeping a mate, and (7) caring for family. I discuss how, why, and when
these motives influence behavior, highlighting that many consumer choices ultimately function
to help fulfill one or more of these evolutionary needs. An important implication of this
framework is that a person’s preferences, behaviors, and decision processes change in
predictable ways depending on which fundamental motive is currently active. Consideration of
evolutionary motives provides fertile ground for future consumer research, while also helping
build bridges between consumer behavior, evolutionary biology, and other social sciences.
Overly Specific Gift Giving: Givers Choose Personalized but Less-Versatile and Less-Preferred Gifts
Robyn LeBoeuf, Associate Professor
Gift givers often struggle to select gifts that recipients are likely to appreciate. This research shows that givers favor gifts that are specifically appropriate for the recipient but are less versatile than what the recipient would prefer to receive, largely because givers tend to focus on recipients’ unique traits and personalities rather than on their multiple, varying wants and needs.
Givers favor overly specific gifts even when they first consider what they themselves would prefer to receive, and they mistakenly believe that recipients will consider these gifts to be more thoughtful and likeable. This tendency is exacerbated when givers are especially motivated to show how well they know recipients, such as when givers select gifts for relationship partners instead of friends, and it is attenuated by encouraging givers to focus on recipients’ current wants and needs. Finally, this tendency can contribute to gift nonuse: recipients take longer to redeem gift cards that are more specific, but givers fail to anticipate this and favor specific over general gift cards.
Prosocial Spending and Happiness: Using Money to Benefit Others Pays Off
Michael Norton, Professor
Happy Money: How Charitable Giving Improves Your Own Happiness – and the Bottom Line.
Can money make you happy? Our research suggests that it can – if you give it away. Encouraging people to spend on others makes people happier than spending on themselves. In addition, the positive impact of behaving charitably can improve organizational health and performance. "Prosocial incentives" dramatically improve employee satisfaction and job performance, while engaging customers in charitable behavior can increase sales and loyalty. Professor Norton will discuss this new research and how these findings should change the way organizations think about incentivizing employees and communicating with customers – and how we should think about spending our own money.
Variational Bayesian Inference for Big Data Marketing Models
Yang Li, Assistant Professor
Hierarchical Bayesian approaches play a central role in empirical marketing as they yield individual-level parameter estimates that can be used for targeting decisions. MCMC methods have been the methods of choice for estimating hierarchical Bayesian models as they are capable of providing accurate individual-level estimates. However, MCMC methods are computationally prohibitive and do not scale well when applied to massive data sets that have become common in the current era of “Big Data”. We introduce to the marketing literature a new class of Bayesian estimation techniques known as variational Bayesian (VB) inference. These methods tackle the scalability challenge via a deterministic optimization approach to approximate the posterior distribution and yield accurate estimates at a fraction of the computational cost associated with simulation-based MCMC methods. We exploit and extend recent developments in variational Bayesian inference and highlight how two VB estimation approaches – Mean-field VB (that is analogous to Gibbs sampling) for conjugate models and Fixed-form VB (which is analogous to Metropolis-Hasting) for nonconjugate models – can be effectively combined for estimating complex marketing models. We also show how recent advances in parallel computing and in stochastic optimization can be used to further enhance the speed of these VB methods. Using simulated as well as real data sets, we apply the VB approaches to several commonly used marketing models (e.g. mixed linear, logit, selection, and hierarchical ordinal logit models), and demonstrate how the VB inference is widely applicable for marketing problems.
Consumer Search and the Structure of Personal Networks
Raghuram Iyengar, Professor
We study how consumers’ information search for and purchase of new products are affected by structure of their personal network. We focus on two network characteristics namely homophily and balance, which are expected to moderate information diagnosticity and search discomfort. To address threats to internal validity common in network studies, we conduct a randomized experiment in which we manipulate the similarity of preference among consumers and their network contacts and allow them to search for information about a product from these contacts before deciding to make a purchase. We estimate consumers’ utility function and determine how network antecedents moderate the weight on others’ information. Our findings show that consumers like to gather information from similar others as it is perceived to be more diagnostic than information from dissimilar others. Balance has no direct effect on search. This null effect is due to a combination of higher diagnosticity and greater discomfort of gathering information in imbalanced networks. Overall, search from similar others in an imbalanced network is most likely to converge to purchase. Given the co-occurrence of homophily and balance in naturally occurring personal networks, our results emphasize the tradeoff between the two network antecedents for product purchase.