Understanding the Internet's relevance to media ownership policy: a model of too many choices

Does the Internet provide a failsafe against media consolidation in the wake of an easing of media ownership rules? This paper posits a model of news outlet selection on the Internet in which consumers experience cognitive costs that increase with the number of options faced. Consistent with psychological evidence, these costs may be reduced by constraining one’s choice set to “safe bets” familiar from offline (e.g., CNN.com). It is shown that, as the number of outlets grows, dispersion of consumer visitation across outlets inevitably declines. Consequently, independent Internet outlets may fail to mitigate lost outlet independence on other media.Choice framing; Media ownership; Internet; Differentiated products; Location models

Strategic Price Positioning for Revenue Management: The Effects of Relative Price Position and Fluctuation on Performance

Emerging price optimization models systematically incorporate competitor price information into the derivation of optimal price points. While consideration of competitor pricing at this tactical level is essential to maximizing short-term revenues, the long-term impact of competitive price positioning on revenue performance should not be overlooked. This study examines the effect of two key dimensions of strategic price positioning - relative price position and relative price fluctuation - on the revenue performance of 6998 US hotels over an 11-year period. It finds that revenue performance is strongest for hotels that price higher than the competition and maintain a consistent relative price over time. Implications for revenue management practitioners are discussed

Optimizing Product Line Designs: Efficient Methods and Comparisons

We compare a broad range of optimal product line design methods. The comparisons take advantage of recent advances that make it possible to identify the optimal solution to problems that are too large for complete enumeration. Several of the methods perform surprisingly well, including Simulated Annealing, Product-Swapping and Genetic Algorithms. The Product-Swapping heuristic is remarkable for its simplicity. The performance of this heuristic suggests that the optimal product line design problem may be far easier to solve in practice than indicated by complexity theory

Economic Well-Being, Social Mobility, and Preferences for Income Redistribution: Evidence from a Discrete Choice Experiment

In this paper, preferences for income redistribution in Switzerland are elicited through a Discrete Choice Experiment (DCE) performed in 2008. In addition to the amount of redistribution as a share of GDP, attributes also included its uses (working poor, the unemployed, old-age pensioners, families with children, people in ill health) and nationality of beneficiary (Swiss, Western European, others). Willingness to pay for redistribution increases with income and education, contradicting the conventional Meltzer-Richard (1981) model. The Prospect of Upward Mobility hypothesis [Hirschman and Rothschild (1973); Benabou and Ok (2001)] receives partial empirical support.Income redistribution, preferences, willingness to pay, discrete choice experiments, stated choice, economic well-being, social mobility

Product Differentiation with Consumer Arbitrage

Also published as Working Paper DFAEII 2003-01spatial price discrimination, product differentiation, personal arbitrage

Wanting a bit(e) of everything. The role of hunger in variety seeking.

We examined whether consumers seek more or less variety when shopping on an empty stomach. The data show that hunger increases variety seeking when consumers make multiple food choices at once. In a first study, participants in the hungry condition selected a more varied flavor set than satiated participants. Food attractiveness mediated the hunger effect. In study 2, we manipulated food attractiveness by the presence of stale food. In study 3, we increased variety seeking by introducing an appetizing olfactory cue. Our findings provide theoretical insights on choice rules and suggest guidelines on the management of variety seeking.Internet; Yield; Market; Market research; Communication; Time;

Suboptimality of Sales Promotions and Improvement Through Channel Coordination

This paper deals with sales promotions in the form of consumer price discounts in fast-moving consumer goods. First, we show analytically that suboptimality is to be expected with respect to the size of the consumer price discount. This is due to the separate decision making of the retailer and the manufacturer. We then compute the impact of this suboptimality for a database of eighty-six sale promotions, and we find that it is substantial. On average, the actual profitability of the sales promotions is only about one fourth of its potential profitability. The suboptimality problem can be solved through specific arrangements between retailer and manufacturer, which have the purpose of better channel coordination. One of these is a proportional discount sharing arrangement, in which each party contributes to the consumer price discount in proportion to its original margin (without sales promotion). Several other winwin arrangements are possible also.Sales promotions;channel coordination;channels of distribution;consumer price discounts