Modeling the Psychology of Consumer and Firm Behavior with Behavioral Economics

Marketing is an applied science that tries to explain and influence how firms and consumers actually behave in markets. Marketing models are usually applications of economic theories. These theories are general and produce precise predictions, but they rely on strong assumptions of rationality of consumers and firms. Theories based on rationality limits could prove similarly general and precise, while grounding theories in psychological plausibility and explaining facts which are puzzles for the standard approach. Behavioral economics explores the implications of limits of rationality. The goal is to make economic theories more plausible while maintaining formal power and accurate prediction of field data. This review focuses selectively on six types of models used in behavioral economics that can be applied to marketing. Three of the models generalize consumer preference to allow (1) sensitivity to reference points (and loss-aversion); (2) social preferences toward outcomes of others; and (3) preference for instant gratification (quasi-hyperbolic discounting). The three models are applied to industrial channel bargaining, salesforce compensation, and pricing of virtuous goods such as gym memberships. The other three models generalize the concept of gametheoretic equilibrium, allowing decision makers to make mistakes (quantal response equilibrium), encounter limits on the depth of strategic thinking (cognitive hierarchy), and equilibrate by learning from feedback (self-tuning EWA). These are applied to marketing strategy problems involving differentiated products, competitive entry into large and small markets, and low-price guarantees. The main goal of this selected review is to encourage marketing researchers of all kinds to apply these tools to marketing. Understanding the models and applying them is a technical challenge for marketing modelers, which also requires thoughtful input from psychologists studying details of consumer behavior. As a result, models like these could create a common language for modelers who prize formality and psychologists who prize realism

A formal definition and a new security mechanism of physical unclonable functions

The characteristic novelty of what is generally meant by a "physical unclonable function" (PUF) is precisely defined, in order to supply a firm basis for security evaluations and the proposal of new security mechanisms. A PUF is defined as a hardware device which implements a physical function with an output value that changes with its argument. A PUF can be clonable, but a secure PUF must be unclonable. This proposed meaning of a PUF is cleanly delineated from the closely related concepts of "conventional unclonable function", "physically obfuscated key", "random-number generator", "controlled PUF" and "strong PUF". The structure of a systematic security evaluation of a PUF enabled by the proposed formal definition is outlined. Practically all current and novel physical (but not conventional) unclonable physical functions are PUFs by our definition. Thereby the proposed definition captures the existing intuition about what is a PUF and remains flexible enough to encompass further research. In a second part we quantitatively characterize two classes of PUF security mechanisms, the standard one, based on a minimum secret read-out time, and a novel one, based on challenge-dependent erasure of stored information. The new mechanism is shown to allow in principle the construction of a "quantum-PUF", that is absolutely secure while not requiring the storage of an exponentially large secret. The construction of a PUF that is mathematically and physically unclonable in principle does not contradict the laws of physics.Comment: 13 pages, 1 figure, Conference Proceedings MMB & DFT 2012, Kaiserslautern, German

Observation of the single-electron regime in a highly tunable silicon quantum dot

We report on low-temperature electronic transport measurements of a silicon metal-oxide-semiconductor quantum dot, with independent gate control of electron densities in the leads and the quantum dot island. This architecture allows the dot energy levels to be probed without affecting the electron density in the leads, and vice versa. Appropriate gate biasing enables the dot occupancy to be reduced to the single-electron level, as evidenced by magnetospectroscopy measurements of the ground state of the first two charge transitions. Independent gate control of the electron reservoirs also enables discrimination between excited states of the dot and density of states modulations in the leads.Comment: 4 pages, 3 figures, accepted for Applied Physics Letter

Proteomic analysis of skin invasion by blood fluke larvae.

BackgroundDuring invasion of human skin by schistosome blood fluke larvae (cercariae), a multicellular organism breaches the epidermis, basement membrane, and dermal barriers of skin. To better understand the pathobiology of this initial event in schistosome infection, a proteome analysis of human skin was carried out following invasion by cercariae of Schistosoma mansoni.Methodology and resultsHuman skin samples were exposed to cercariae for one-half hour to two hours. Controls were exposed to water used to collect cercariae in an identical manner, and punctured to simulate cercarial tunnels. Fluid from both control and experimental samples was analyzed by LC/MS/MS using a linear ion trap in "triple play" mode. The coexistence of proteins released by cercariae and host skin proteins from epidermis and basement membrane confirmed that cercarial tunnels in skin were sampled. Among the abundant proteins secreted by cercariae was the cercarial protease that has been implicated in degradation of host proteins, secreted proteins proposed to mediate immune invasion by larvae, and proteins implicated in protection of parasites against oxidative stress. Components of the schistosome surface tegument, previously identified with immune serum, were also released. Both lysis and apoptosis of epidermal cells took place during cercarial invasion of the epidermis. Components of lysed epidermal cells, including desmosome proteins which link cells in the stratum granulosum and stratum spinosum, were identified. While macrophage-derived proteins were present, no mast cell or lymphocyte cytokines were identified. There were, however, abundant immunoglobulins, complement factors, and serine protease inhibitors in skin. Control skin samples incubated with water for the same period as experimental samples ensured that invasion-related proteins and host protein fragments were not due to nonspecific degeneration of the skin samples.ConclusionsThis analysis identified secreted proteins from invasive larvae that are released during invasion of human skin. Analysis of specific host proteins in skin invaded by cercariae served to highlight both the histolytic events facilitating cercarial invasion, and the host defenses that attempt to arrest or retard invasion. Proteins abundant in psoriatic skin or UV and heat-stressed skin were not abundant in skin invaded by cercariae, suggesting that results did not reflect general stress in the surgically removed skin specimen. Abundant immunoglobulins, complement factors, and serine protease inhibitors in skin form a biochemical barrier that complements the structural barrier of the epidermis, basement membrane, and dermis. The fragmentation of some of these host proteins suggests that breaching of host defenses by cercariae includes specific degradation of immunoglobulins and complement, and either degradation of, or overwhelming the host protease inhibitor repertoire

Polarimetric clutter modeling: Theory and application

The two-layer anisotropic random medium model is used to investigate fully polarimetric scattering properties of earth terrain media. The polarization covariance matrices for the untilted and tilted uniaxial random medium are evaluated using the strong fluctuation theory and distorted Born approximation. In order to account for the azimuthal randomness in the growth direction of leaves in tree and grass fields, an averaging scheme over the azimuthal direction is also applied. It is found that characteristics of terrain clutter can be identified through the analysis of each element of the covariance matrix. Theoretical results are illustrated by the comparison with experimental data provided by MIT Lincoln Laboratory for tree and grass fields