Dynamic pricing with the counter-conformity, conformity and non-conformity of consumer behavior

Confronted with well-informed consumers, the firms have to take everything into consideration. Through the classic game theory, pricing mechanism is discussed with different characteristics of consumer behavior. The consumer population is heterogeneous along two dimensions: they may have an inclination towards the obedience of the public and different degrees of patience. After introducing the price deviation variables, we demonstrate that heterogeneity in both inclination and patience is important because they jointly determine the structure of optimal pricing policies. The numerical example shows that the markdown degree, the expected purchasing amount of consumers and the expected profits of the firm are increasing with the increase of the proportion of counter-conformity consumers. And we also examine whether the discount rate of capital, counter-conformity consumers and myopic consumers will have an impact on the sales. In particular, when the discount rate and the proportion of the conformity customers are too high, the expected profits of the firm are increasing mildly with the increase of the proportion of myopic customers. Therefore, the discount rate and characteristics of consumer behavior should be considered together to maximize the revenue of firms

Personality and the effectivity of digital nudges: an empirical study

Decision making isn’t always rational and fact-based. Instead, it’s often intuitive and stems from heuristics. So-called nudge theory is based on this idea. Nudges are meant to influence behaviour with the use of these heuristics and biases. In this research I study two digital nudges in a context of an online store and examine how consumer’s personality affects their effectivity. The other nudge is a discounted price with limited availability and it is based on loss aversion bias. The other one is a rating given by other customers. It is based on conformity bias. The data I use is from a web survey with a sample size of 237. In the survey, I measured respondents’ personality with Big Five personality dimensions and their behaviour with a choice-based conjoint analysis. The findings of this study are in many ways consistent with a previous literature and the results also give new insights on the individual differences in the effectivity of nudging. Openness to Experience was negatively correlated with the susceptibility to both nudges. High Conscientiousness, on the other hand, reduced susceptibility to the nudge that utilizes the conformity bias. In addition, other correlations between personality and the effectivity of the nudges were found, but those findings were not statistically significant, probably due to small sample size. Still, the results are promising for further research

Dynamic Models of Religious Conformity and Conversion: Theory and Calibrations

This paper develops behavioral and deterministic overlapping generations models to explain and simulate changes in the proportion of secular and religious people. Under the behavioral approach, the role of the church is to generate an externality associated with the investment in enhancing the conformity rate among young believers. Under the deterministic approach, changes in the number of nonbelievers are explained by different birth rates among secular and religious parents as well as the relative proportion of nonconformists among the young in each group. This model is then used to calibrate for (non)conformity rates among secular and religious people. ZUSAMMENFASSUNG - (Dynamische Modelle religiöser Konformität und Konversion: Theorie und Simulationen) Diese Arbeit entwickelt deterministische und Verhaltensmodelle mit überlappenden Generationen, welche die Veränderungen des Zahlenverhältnisses von nicht religiösen zu religiösen Menschen erklären und simulieren. Im Verhaltensansatz wird aufgezeigt, dass der Kirche die Aufgabe zukommt, einen externen Effekt zu erzeugen, der dafür sorgt, dass junge Gläubige mit der Glaubenseinstellung ihrer Eltern konform gehen. Der deterministische Ansatz erklärt die Veränderungen in der Anzahl Nichtgläubiger einerseits mit den unterschiedlichen Geburtenraten unter nichtgläubigen Eltern im Vergleich zu religiösen Eltern und andererseits durch den relativen Anteil von Nichtkonformen unter der jungen Generation in jeder Gruppe. Dieses Modell wird verwandt, um (Nicht-)Konformitätsraten--nach denen junge Menschen ihren Eltern im Glauben folgen oder nicht--innerhalb der Gruppen weltlicher sowie religiöser Menschen zu berechnen.Conversion, Religious conformity, Role of the Church, Nonconformity, Nonreligious people, Religious Affiliation, Parents’ education, Believers, Nonbelievers.

Genetic Variability and Collective Social Norms: The Case of Binge Drinking

This paper explores how collective social norms can have individual-level genetic foundation. Our study is the first we know to report a plausible link between genetically founded individual preferences in a fraction of a population and social norms governing behavior of all individuals. As our motivating example, we focus on patterns of Excessive Drinking in Social Situations (EDSS) across Europe that are possibly triggered by genetically caused variations in personality. The genetic trait is shyness, which correlates with eye color. We present empirical results indicating that alcohol consumption in social situations correlate with eye color and a model which suggests that conditions exist in which EDSS can emerge as a strategy in a larger fraction of the population than is genetically predisposed to EDSS. In addition, our model shows that alcohol taxes may be counter-productive in controlling the emergence of EDSS as a social norm.Excessive Drinking in Social Situations (EDSS); drinking behavior; genetically founded individual preferences; sosial norms

Dynamic Duopoly with Congestion Effects

We analyze duopolistic competition between horizontally differentiated firms selling durable goods or services subject to congestion. At each point of time, new customers buy one unit of the commodity from one of the firms, by comparing present prices and future congestion rates. We study the linear Markov equilibrium of this game which exists and is unique when firms are not too different. The existence of negative consumption externalities is shown to soften the price competition. Moreover, we show that the firm with the larger capacity has, at the steady state, a larger market share, a higher price, and a lower congestion rate. The price of an entrant decreases gradually after entry, while the price of the incumbent rises. The speed of convergence to the steady state is faster, the stronger is the congestion effect. On étudie la concurrence entre deux firmes qui vendent des biens ou des services durables sous la condition d'encombrement. À chaque instant, des clients nouveaux achètent une unité du bien, en comparant les prix et les taux d'encombrement futur. On caractérise l'équilibre markovien de ce jeu. L'existence des externalités négatives rend la concurrence moins féroce. On montre que la firme qui a la plus grande capacité a, dans l'état stationnaire, une plus grande part de marché, un prix plus élevé, et un taux d'encombrement plus faible. Le prix du bien d'une nouvelle firme diminue continuellement, tandis que celui de son rival en exercise monte. La vitesse de convergence est une fonction croissante de l'effet d'encombrement.duopoly, differential games, Markov perfect equilibrium, duopole, jeux différentiels, équilibre markovien parfait

Examining the role of luxury brands in ytopia

A vast body of knowledge exists with regards to the attitudes involved in the consumption of luxury brands. The purchase of products for their symbolic and social value rather than for their inherent utility in now widely recognised as a significant determinant of consumer behaviour (Mason 1992). With changes in industry trends, gaps in knowledge are created. Thus, it is important to examine luxury brands in relation to uniqueness. Moreover, whether consumers need for uniqueness is in fact a need for status in this younger emerging market. This research plans to integrate earlier research from two academic areas that have examined uniqueness. First there is considerable research in psychology on how consumers use possessions to define identity (Knight and Kim 2007; Belk 1988; Campbell 1995; Clark, Zboja, and Goldsmith 2007; Goldsmith and Clark 2008; O'Cass and Frost 2002; Phau and Leng 2008; Simonson and Nowls 2000; Tian, Bearden, and Hunter 2001). Second marketing has examined how a variety of factors influence the consumption of certain products and brands. Studies have found for example, that status seeking consumers are concerned with their peers and use brands to convey this message (O'Cass and Frost 2002; Ruvio, Shoham, and Brencic 2008). This paper will give a detailed description and analysis of the previous literature relating to the key constructs in this field. To begin with, a background of the constructs in the literature will be discussed. Followed by a discussion of how the constructs have been employed in previous studies. In the course of the review process, various gaps in the literature will be acknowledged for further study

Institutional strategy and corporate social responsibility of the new entrant in the grocery retail market: Case Lidl Finland

Objective of the Study Corporate social responsibility (CSR) has become an increasingly important consideration for modern businesses. There is a research gap relating to the concept and role of CSR in the new market entry. This study sets out to explore the institutional approach and CSR strategy of a multinational corporation (MNC) in the context of new market entrance. The case organization examined in the study is Lidl Finland, which is a subsidiary of German-based multinational grocery retailer Lidl. The purpose of the study is to examine how the change of firm’s CSR strategy takes place upon market entry and how it is affected by institutional pressures. Methodology The theoretical basis of this study relies on key literature from three subject areas: internalization theory, CSR, and institutional theory and strategies. Through qualitative single case study the causal factors underlying the process of change are identified and examined in the provided theoretical setting. A longitudinal process data, collected from media archives and interviews, is exploited in order to build an explanation and rationale for the changed CSR strategy of Lidl Finland. The idea is that longitudinal examination of organizational events and incidents provides a transparent description of the transition of the organization over time. Findings and Conclusions The initial institutional approach of Lidl Finland could be described as defiant and the company was perceived as an irresponsible actor. This could mainly be contributed to the existence of strict business concept, lacking operational resources, liabilities of foreignness and cultural differences. The turn of 2005 can be dated as the starting point for the organizational change. Afterwards CSR gradually gained more prominent role in the business operations. Even though the mounting stakeholder pressure was the initial factor driving the organizational change, there were several other complexities that also affected the change of CSR strategy. These complexities included changes in the business strategy, different phases of the entry process, increased attention for CSR amongst stakeholders, alterations in the operating concept, and attainment of social capital. The role of CSR is an important consideration for a new market entrant, because responsible corporate behavior is directly linked with the attainment of organizational legitimacy. Finally, this study contributes in the form of descriptive propositions, which highlight the role of CSR considerations in the context of new market entry

Interpersonal Effects in Consumption: Evidence from the Automobile Purchases of Neighbors

This study analyzes the automobile purchase behavior of all residents of two Finnish provinces over several years. It finds that a consumer's purchases are strongly influenced by the purchases of his neighbors, particularly purchases in the recent past and by neighbors who are geographically most proximate. There is little evidence that emotional biases, like envy or an urge to conform, lie behind the interpersonal influence in automobile consumption. The most reasonable alternative explanation for these findings is some form of information sharing among neighbors.

Dynamic models of religious conformity and conversion: theory and calibration

"This paper develops behavioral and deterministic overlapping generations models to explain and simulate changes in the proportion of secular and religious people. Under the behavioral approach, the role of the church is to generate an externality associated with the investment in enhancing the conformity rate among young believers. Under the deterministic approach, changes in the number of nonbelievers are explained by different birth rates among secular and religious parents as well as the relative proportion of nonconformists among the young in each group. This model is then used to calibrate for (non)conformity rates among secular and religious people." (author's abstract)"Diese Arbeit entwickelt deterministische und Verhaltensmodelle mit überlappenden Generationen, welche die Veränderungen des Zahlenverhältnisses von nicht religiösen zu religiösen Menschen erklären und simulieren. Im Verhaltensansatz wird aufgezeigt, dass der Kirche die Aufgabe zukommt, einen externen Effekt zu erzeugen, der dafür sorgt, dass junge Gläubige mit der Glaubenseinstellung ihrer Eltern konform gehen. Der deterministische Ansatz erklärt die Veränderungen in der Anzahl Nichtgläubiger einerseits mit den unterschiedlichen Geburtenraten unter nichtgläubigen Eltern im Vergleich zu religiösen Eltern und andererseits durch den relativen Anteil von Nichtkonformen unter der jungen Generation in jeder Gruppe. Dieses Modell wird verwandt, um (Nicht-)Konformitätsraten - nach denen junge Menschen ihren Eltern im Glauben folgen oder nicht - innerhalb der Gruppen weltlicher sowie religiöser Menschen zu berechnen." (Autorenreferat