Interview by Simon Cushing

Simon Cushing conducted the following interview with Elizabeth Anderson on 18 June 2014

Regulation of Television advertising

Regulation of television advertising typically covers both the time devoted to commercials and restrictions on the commodities or services that can be publicized to various audiences (stricter laws often apply to children’s programming). Time restrictions (advertising caps) may improve welfare when advertising is overprovided in the market system. Even then, such caps may reduce the diversity of programming by curtailing revenues from programs. They may also decrease program net quality (including the direct benefit to viewers). Restricting advertising of particular products (such as cigarettes) likely reflects paternalistic altruism, but restrictions may be less efficient than appropriate taxes.television, advertising, regulation, length caps, advertising content

Cognitive appraisals, emotional reactions, and their associations with three forms of peer-victimization

Victimized students’ cognitive appraisals (perceived threat, control) are related to emotional reactions. Furthermore, psychosocial wellbeing is differentially associated with form of victimization (direct vs. indirect), suggesting that emotional reactions to direct and indirect victimization may also differ. The present study therefore evaluated appraisals and emotional reactions within the context of verbal, physical, and indirect victimization experiences, testing a mediational model which considers appraisals to mediate the effect of victimization upon emotional reaction. Participants were 146 students (44% male) aged 10-13 years attending mainstream schools in Scotland (UK). Self-report measures assessed peer-victimization (physical, verbal, indirect), appraisal (control, threat) and emotional reaction (anger, sadness). All forms of victimization were positively associated with both emotions. Threat appraisals were positively associated with all forms of victimization and control appraisals were negatively associated with physical victimization. The relationships between appraisals and emotions varied according to victimization type. The effects of victimization upon emotions were not mediated via appraisals. These results extend our understanding of the relationships between victimization and affect

Product Characteristics and Price Advertising with Consumer Search

Many advertisements inform the consumer about product characteristics, while others give price information with very little product information, and some provide both types of information. We propose a framework to analyze the incentives for firms to provide various types of information. We consider the case of a single seller. There is no incentive to provide information on product characteristics only, since doing so leads to a holdup problem that the consumers would rationally expect the firm to charge such a high price that no consumer would wish to incur the prior search cost. (A more general argument applies to markets with several firms.) However, price-only and price-and-characteristics advertising can arise depending on the relative strength of product differentiation and consumer search costs. Even when it costs the firm very little to inform consumers the firm may have no incentive to advertise if consumers will sample it anyway. For low search costs the firm has a strict incentive NOT to let consumers know because the firm garners higher profit when consumers have sunk the search cost. Forced disclosure and dissemination of information improves social welfare by eliminating useless search behavior that leads to no purchases (as well as enabling consumers to buy at lower prices). Second, even when the firm must advertise to bring in consumers (i.e., for larger search costs), the firm may prefer to keep consumers in the dark about how much they like the product - this behavior again entails excessive search. Finally, even when the firm finds it optimal to inform consumers of both their match values and the price charged, the level of advertising is too small because the firm only accounts for its private benefit per consumer informed when determining how much to advertise, and not the extra benefit to consumers of making a valuable match.

Consumer Information and Firm Pricing: Negative Externalities from Improved Information

We analyze the effect of consumer information on firm pricing in a model where consumers search for prices and matches with products. We consider two types of consumers. Uninformed consumers do not know in advance their match values with firms, whereas informed consumers do. Prices are lower the greater the proportion of uninformed consumers. Hence uninformed consumers exert a positive externality on the others, in contrast to standard results. This leads to socially excessive investment in gathering prior information when aggregate demand is price-sensitive.

Efficiency and surplus bounds in Cournot competition

We derive bounds on the ratios of deadweight loss and consumer surplus to producer surplus under Cournot competition. To do so, we introduce a parameterization of the degree of curvature of market demand using the parallel concepts of ?-concavity and ?-convexity. The ?more concave? is demand, the larger the share of producer surplus in overall surplus, the smaller is consumer surplus relative to producer surplus, and the lower the ratio of deadweight loss to producer surplus. Deadweight loss over total potential surplus is at Þrst increasing with demand concavity, then eventually decreasing. The analysis is extended to asymmetric Þrm costs.Cournot equilibrium, social surplus analysis, deadweight loss, market performance.