Situation Variation in Consumers’ Media Channel Consideration

In this article, the authors investigate consumers’ consideration of media channels during different usage situations. They develop a model that explains consumers’ media channel consideration as a function of the media channel’s perceived benefits. In addition, they hypothesize that the usage situation affects consumers’ media channel consideration and that situation-based benefit requirements moderate the effect of the benefits on their channel consideration. The authors test the hypothesized relationships using survey data from 341 consumers regarding their consideration of 12 different media channels used by manufacturers to communicate product information across three product-related usage situations. The results of the analyses support the proposed model structure and confirm the expected relationships among perceived media channel benefits, usage situations, media channel requirements, and consumers’ media channel consideration.marketing ;

Consumer Preferences for Mass Customization

Increasingly, firms allow consumers to mass customize their products. In this study, the authors investigate consumers’ evaluations of different mass customization configurations when asked to mass customize a product. For instance, mass customization configurations may differ in the number of modules that may be mass customized. The authors find – in the context of mass customization of personal computers – that mass customization configuration affects the product utility consumers can achieve in mass customization as well as their perception of mass customization complexity. In turn, product utility and complexity affect the utility consumers derive from using a certain mass customization configuration. More specifically, product utility has a positive, and complexity has a negative effect on mass customization configuration utility. The effect of complexity is direct as well as indirect, because complexity also lowers product utility. The authors also find that consumers with high product expertise find mass customization configurations less complex than consumers with low product expertise and that for more expert consumers complexity has a less negative impact on product utility. The study has important managerial implications for how companies can design their mass customization configuration to increase utility and decrease complexity.marketing ;

How Tolerable is Delay? Consumers\u27 Evaluations of Internet Web Sites after Waiting

The effect of waiting times on consumers’ retrospective evaluations of internet web sites is investigated in four computer-based experiments. Results show that waiting can, but does not always, negatively affect evaluations of web sites. They also show that the potential negative effects of waiting can be neutralized by effectively managing waiting experiences. A conceptual framework and formal random utility model are introduced

Recommendation Agent Acceptance: The Impact of Decision Difficulty in RA Sets of Multidimensional Products

Recommendation Agents aim at reducing decision effort and improving quality through recommending a set of alternatives which fits users’ preferences. The list of the alternatives is typically compiled in a multidimensional way, where the user is called to indicate preferences regarding a number of different product dimensions. Nevertheless, in decision situations where products are characterized by a variety of advantages and disadvantages, consumers may be confronted with conflicting values of product attributes, leading to severe dilemmas and decision paralysis. Based on theories on choice context effects, it is proposed that the relationship between the attributes of the recommended products impact perceptions regarding the quality of the decision process as well as the quality of decision outcomes, including the acceptance of the technology. This study proposes a novel method of determining the presentation of the recommended alternatives and suggests a system design which minimizes decision difficulty and maximizes both user’s satisfaction and the agent’s use

Choice Architecture for Healthier Insurance Choices: Ordering and Partitioning Can Improve Decisions

Health insurance decisions are a challenge for many consumers and influence welfare, health outcomes, and longevity. Two choice architecture tools are examined that can improve these decisions: informed ordering of options (from best to worst) and choice set partitioning. It is hypothesized that these tools can improve choices by changing: (1) decision focus: the options in a set on which consumers focus their attention, and (2) decision strategy: how consumers integrate the different attributes that make up the options. The first experiment focuses on the mediating role of the hypothesized decision processes on consumer decision outcomes. The outcome results are validated further in a field study of over 40,000 consumers making actual health insurance choices and in two additional experiments. The results show that informed ordering and partitioning can reduce consumers’ mistakes by hundreds of dollars per year. They suggest that wise choice architecture interventions depend upon two factors: The quality of the user model possessed by the firm to predict consumers’ best choice and possible interactions among the ensemble of choice architecture tools

The Structure of Online Consumer Communication Networks

In this paper we study the structure of the bilateral communication links within Online Consumer Communication Networks (OCCNs), such as virtual communities. Compared to the offline world, consumers in online networks are highly flexible to choose their communication partners and little is known about how this affects communication exchange structures. We analyze these structures by using a general approach from the game-theoretic literature of social and economic network formation where individuals trade off the cost of forming and maintaining links against the potential rewards of doing so, which results in a stable network structure. In our analysis, a combination of aspects common to OCCNs is incorporated that has not been investigated in this literature until now. First, the negative externality of communication specificity is included in the sense that the more direct connections an individual has to maintain with other individuals, the less she is able to specify her attention per link within her total time available. Therefore, the additive value per individual of her communications declines with an increasing number of links, and she also derives less additive value per individual from others with an increasing number of links. Second, a distinction is made between the social and informational value of communication, where informational communication value is assumed to be transferable via indirect links, whereas social communication value is not transferable. Analytical results are derived by using the concept of pairwise stability. A tendency towards fragmented pairwise stable structures - consisting of small, disjoint (star) components - is discovered, which can be attributed to the joint effect of the two aspects mentioned. We demonstrate that only some of the pairwise stable structures provide optimal welfare (total payoffs), and that the relative focus on informational versus social value of communication affects this welfare.microeconomics ;

Behavorial Effects in Individual Decisions of Network Formation

Network formation constitutes an important part of many social and economic processes, but relatively little is known about how individuals make their linking decisions. This article provides an experimental investigation of behavioral effects in individual decisions of network formation. Our findings demonstrate that individuals systematically simplify more complex components of network payoff in their linking decisions. Specifically, they focus on only part of the normative payoff, namely on their own direct payoff and tend to ignore indirect payoff and payoff for others in the network. Additionally, individuals use descriptive behavioral traits of link choice alternatives to guide their choices. They are sensitive to whether an alternative involves link deletion or creation and whether it concerns an isolated or a central node. Furthermore, we find that complexity of one type can moderate individuals’ dealing with a complex feature of another type. These behavioral effects have important implications for researchers and managers working in areas that involve network formation.Economics (Jel: A)

Communication network formation with link specificity and value transferability

We propose a model on strategic formation of communication networks with (i) link specificity: the more direct links somebody maintains, the less she can specify her attention per link, the lower her links’ value, while this negative externality was previously ignored in the communication context, and (ii) value transferability via indirect links for informational but not for social value from communication, while this positive externality was modeled uniformly before. Assuming only social value to isolate the impact of link specificity, the pairwise stable set includes many nonstandard networks under high or particular combinations of fully connected components under low link specificity. Allowing for social and informational value, the joint effect of link specificity and value transferability reduces the stable set to certain fragmented networks under high or the complete network under low link specificity. These extremes are beneficial for efficiency, whereas quite inefficient networks may arise for intermediate link specificity.microeconomics ;

Combining Individual-Level Discrete Choice Experiment Estimates and Costs to Inform Health Care Management Decisions about Customized Care: The Case of Follow-Up Strategies after Breast Cancer Treatment

AbstractObjectiveCustomized care can be beneficial for patients when preferences for health care programs are heterogeneous. Yet, there is little guidance on how individual-specific preferences and cost data can be combined to inform health care decisions about customized care. Therefore, we propose a discrete choice experiment–based approach that illustrates how to analyze the cost-effectiveness of customized (and noncustomized) care programs to provide information for hospital managers.MethodsWe exploit the fact that choice models make it possible to determine whether preference heterogeneity exists and to obtain individual-specific parameter estimates. We present an approach of how to combine these individual-specific parameter estimates from a random parameter model (mixed logit model) with cost data to analyze the cost-effectiveness of customized care and demonstrate our method in the case of follow-up after breast cancer treatment.ResultsWe found that there is significant preference heterogeneity for all except two attributes of breast cancer treatment follow-up and that the fully customized care program leads to higher utility and lower costs than the current standardized program. Compared with the single alternative program, the fully customized care program has increased benefits and higher costs. Thus, it is necessary for health care decision makers to judge whether the use of resources for customized care is cost-effective.ConclusionsDecision makers should consider using the results obtained from our methodological approach when they consider implementing customized health care programs, because it may help to find ways to save costs and increase patient satisfaction

Beyond nudges: Tools of a choice architecture

The way a choice is presented influences what a decision-maker chooses. This paper outlines the tools available to choice architects, that is anyone who present people with choices. We divide these tools into two categories: those used in structuring the choice task and those used in describing the choice options. Tools for structuring the choice task address the idea of what to present to decision-makers, and tools for describing the choice options address the idea of how to present it. We discuss implementation issues in using choice architecture tools, including individual differences and errors in evaluation of choice outcomes. Finally, this paper presents a few applications that illustrate the positive effect choice architecture can have on real- world decisions