Information Acquisition and Refunds for Returns

A product exhibits personal fit uncertainty when its consumers have idiosyncratic and uncertain values for it. Often a consumer can learn her long-run value quickly by obtaining the good for a trial period. Money back guarantees of satisfaction are commonly used to lower the cost to consumers of learning their values this way. Increasingly, however, consumers can instead learn about their values before they purchase by, e.g., reading product reviews or consulting experts. We study the effect on a firm’s optimal price and refund of this competing source of information. An efficient outcome would be achieved by setting the refund for a return equal to its salvage value. But a monopoly will, for some parameters, induce consumers to stay uninformed by promising a refund that is greater than the salvage value. This generates an inefficiently large number of returns, which the firm finds worthwhile in order to eliminate the information rents that consumers would obtain by becoming informed. This finding is consistent with the observation that for many products, money back guarantees are generous, as they commonly refund the entire, or almost the entire, purchase price of a product.information acquisition, refunds, money back guarantees, personal fit uncertainty

Information Acquisition and Refunds for Returns

A product exhibits personal fit uncertainty when its consumers have idiosyncratic and uncertain values for it. Often a consumer can learn her long-run value quickly by obtaining the good for a trial period. Money back guarantees of satisfaction are commonly used to lower the cost to consumers of learning their values this way. Increasingly, however, consumers can instead learn about their values before they purchase by, e.g., reading product reviews or consulting experts. We study the effect on a firm’s optimal price and refund of this competing source of information. An efficient outcome would be achieved by setting the refund for a return equal to its salvage value. But a monopoly will, for some parameters, induce consumers to stay uninformed by promising a refund that is greater than the salvage value. This generates an inefficiently large number of returns, which the firm finds worthwhile in order to eliminate the information rents that consumers would obtain by becoming informed. This finding is consistent with the observation that for many products, money back guarantees are generous, as they commonly refund the entire, or almost the entire, purchase price of a product.information acquisition, refunds, money back guarantees, personal fit uncertainty

Information Acquisition and the Excess Refund Puzzle

A buyer can learn her value for a returnable experience good by trying it out, with the option of returning the good for whatever refund the seller offers. Sellers tend to offer a “no questions asked” refund for such returns, a money back guarantee. The refund is often too generous, generating inefficiently high levels of returns. We present two versions of a model of a returnable goods market. In the Information Acquisition Model, consumers are ex ante identical and uninformed of their private values for the good. The firm then offers a generous refund in order to induce the consumers to learn their values by purchasing and trying the good out, rather than by doing costly research prior to purchasing. In the Screening Model, some consumers have negligible costs of becoming informed about their values prior to purchasing, and always do so; other consumers have prohibitive costs of acquiring pre-purchase information and always stay uninformed. The firm’s optimal screening menu may then contain only a single contract, one that specifies a generous refund, and hence a high purchase price, in order to weaken the incentive constraint of the informed consumers.information acquisition, refunds, money back guarantees, returnable experience goods

Incentives : The Scaffolding that Keeps Economic Orthodoxy from Teetering into Oblivion?

Incentives are commonly perceived to be one of the primary motivational forces that drive a capitalistic economy. By in large, they are seen within the orthodox economic disciplinary field as the counterpart to self-interest and rational choice theory. They are described as not merely wanted but needed. The aim of this paper is to invalidate the myth that incentives are necessary for the regeneration of society. Instead, it is put forward that the two fundamental components required are human instincts and habits (which encompass norms, mores and values). In this light, the explanation of incentives as a driving mechanism for economic renewal becomes diminished

Money-Back Warranties

We present a model of monopoly provision of money-back warranties. A buyer values an object more than its seller. They are both risk neutral and initially have no private information. The buyer can, however, acquire information and learn his true valuation for the object. Information acquisition is wasteful because it is costly, and because it reduces the gains from trade. The seller uses a warranty to prevent wasteful information acquisition, by offering the buyer some of the benefit that the information would have given him, namely, the ability not to purchase useless objects. We compare the optimal contracts when a warranty can be offered and when it cannot. We find that when the cost of information is lower than a threshold, allowing the seller to offer a warranty is welfare improving. However, when the cost of information is higher than the threshold, it is socially optimal to forbid money-back warranties.

The PDK1-Rsk signaling pathway controls Langerhans cell proliferation and patterning

Langerhans cells (LC), the dendritic cells of the epidermis, are distributed in a distinctive regularly spaced array. In the mouse, the LC array is established in the first few days of life from proliferating local precursors, but the regulating signaling pathways are not fully understood. We found that mice lacking the kinase phosphoinositide-dependent kinase 1 selectively lack LC. Deletion of the phosphoinositide-dependent kinase 1 target kinases, ribosomal S6 kinase 1 (Rsk1) and Rsk2, produced a striking perturbation in the LC network: LC density was reduced 2-fold, but LC size was increased by the same magnitude. Reduced LC numbers in Rsk1/2?/? mice was not due to accelerated emigration from the skin but rather to reduced proliferation at least in adults. Rsk1/2 were required for normal LC patterning in neonates, but not when LC were ablated in adults and replaced by bone marrow–derived cells. Increased LC size was an intrinsic response to reduced LC numbers, reversible on LC emigration, and could be observed in wild type epidermis where LC size also correlated inversely with LC density. Our results identify a key signaling pathway needed to establish a normal LC network and suggest that LC might maintain epidermal surveillance by increasing their “footprint” when their numbers are limite

Cohort differences in disease and disability in the young-old: findings from the MRC Cognitive Function and Ageing Study (MRC-CFAS).

BACKGROUND: Projections of health and social care need are highly sensitive to assumptions about cohort trends in health and disability. We use a repeated population-based cross-sectional study from the Cambridgeshire centre of the UK Medical Research Council Cognitive Function and Ageing Study to investigate trends in the health of the young-old UK population METHODS: Non-overlapping cohorts of men and women aged 65-69 years in 1991/2 (n = 689) and 1996/7 (n = 687) were compared on: self-reported diseases and conditions; self-rated health; mobility limitation; disability by logistic regression and four-year survival by Cox Proportional Hazards Regression models, with adjustments for differences in socio-economic and lifestyle factors. RESULTS: Survival was similar between cohorts (HR: 0.91, 95% CI: 0.62 to 1.32). There was a significant increase in the number of conditions reported between cohorts, with more participants reporting 3 or more conditions in the new cohort (14.2% vs. 10.1%). When individual conditions were considered, there was a 10% increase in the reporting of arthritis and a significant increase in the reporting of chronic airways obstruction (OR: 1.36, 95% CI: 1.04 to 1.78). CONCLUSION: This study provides evidence of rising levels of ill-health, as measured by the prevalence of self-reported chronic conditions, in the newer cohorts of the young-old. Though changes in diagnosis or reporting of disease cannot, as yet, be excluded, to better understand whether our findings reflect real increases in ill-health, investment should be made into improved population-based databases, linking self-report and objective measures of health and function, and including those in long-term care

Beyond TTM and ABC: A Practice Perspective on Physical Activity Promotion for Adolescent Females from Disadvantaged Backgrounds

This paper builds on a growing body of literature on the promise of practice theory in understanding and promoting behavior change in society and develops upon Blue (2017) and Spotswood et al.’s (2019) rationale for evolving theories of practice into the domain of contemporary physical activity research. We begin by considering the intersectional nature of the problem. Statistics reveal that physical activity gradients exist based on gender, as well as socio-economic position. Women, girls, and disadvantaged populations report lower levels of activity than more affluent males and females. More problematic still is what StreetGames (2017) call the “double jeopardy”, where these characteristics intersect, intensifying the negative gradient. Our argument then comprises three parts. First, we provide a critical discussion of intervention studies seeking to transform exercise behavior amongst these populations. The issue we identify is that studies typically rely on behavior change models, such as the Transtheoretical Model (TTM) and the ABC framework. However, these models tend to take insufficient account of the practical and social aspects of behavior change in physical activity, and thus their subjects often succumb to value-action gaps (Shove, 2010). Second, in contrast, we propose that practice theory provides a promising alternative theoretical lens for promoting behavior change in disadvantaged and often resistant populations. Third, the paper highlights a range of conceptual considerations for exploring the relationship between young, disadvantaged women and physical activity, as well as the development of tangible solutions to improve participatio

Problematic technology use and sleep quality in young adulthood: novel insights from a nationally representative twin study

Study Objectives: Digital technology use is associated with poor sleep quality in adolescence and young adulthood although research findings have been mixed. No studies have addressed the association between the two using a genetically informative twin design which could extend our understanding of the etiology of this relationship. This study aimed to test: (1) the association between adolescents’ perceived problematic use of digital technology and poor sleep quality, (2) whether the association between problematic use of technology and poor sleep quality remains after controlling for familial factors, and (3) genetic and environmental influences on the association between problematic use of technology and poor sleep quality. Methods: Participants were 2232 study members (18-year-old twins) of the Environmental Risk (E-Risk) Longitudinal Twin Study. The sample was 48.9% male, 90% white, and 55.6% monozygotic. We conducted regression and twin difference analyses and fitted twin models. Results: Twin differences for problematic use of technology were associated with differences for poor sleep quality in the whole sample (p < 0.001; B = 0.15) and also when we limited the analyses to identical twins only (p < 0.001; B = 0.21). We observed a substantial genetic correlation between problematic use of technology and sleep quality (rA = 0.31), whereas the environmental correlation was lower (rE = 0.16). Conclusions: Adolescent reported problematic use of digital technology is associated with poor sleep quality—even after controlling for familial factors including genetic confounds. Our results suggest that the association between adolescents’ sleep and problematic digital technology use is not accounted for by shared genetic liability or familial factors but could reflect a causal association. This robust association needs to be examined in future research designed to test causal associations